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Evertec: An Established Leader In An Emerging Market

Apr. 02, 2021 11:06 AM ETEVERTEC, Inc. (EVTC)PYPL6 Comments
Altimetry profile picture


  • As the pandemic swept across the globe, e-commerce flourished, and with it, digital payment adoption and usage expanded, especially in underpenetrated regions, such as Latin America.
  • While the pandemic may have been the catalyst, these digital payment trends are here to stay, and EVERTEC, a Puerto Rico-based transaction processing company, is well-positioned to ride these tailwinds.
  • The firm has largely missed out on the stock price appreciation of some peers thus far, opening the door for large potential gains when the market realizes the firm’s unique position.
  • Currently, the market is expecting EVERTEC to see a modest decline in profitability with limited growth, and if the firm can just mitigate profitability declines while growing along with the industry, it is set up for material equity upside.

The global COVID-19 pandemic has served as a major accelerant to the digital payments industry. During the surge of lockdowns and restrictions that defined 2020, consumer spending habits shifted dramatically. The world experienced an "At-Home Revolution" as people spent more on their previously overlooked domiciles - in order to work better at home, entertain themselves at home, supply their homes, and protect their homes.

This spending shift has led to a significant surge in e-commerce, and the growth of this retail industry disruption has been fast-tracked. E-commerce represents one of the most powerful and durable growth drivers for digital payment volumes and digital payment adoption. This year, analysis by Insider Intelligence estimates that worldwide retail e-commerce sales grew by an impressive 27.6%

Even outside of e-commerce, pandemic-driven concerns have led to a wider adoption of digital payment innovations, such as contactless payments and QR codes, that create a safer in-store shopping environment.

The pandemic has been beneficial to the industry in the short term, and the changes it's causing are not going to be a temporary shift. These tailwinds will last for years to come. Greater convenience, favorable government policies, and evolving consumer behavior are driving the ever-increasing demand for cashless payments. Some estimate that the digital payments market will grow 13.7% annually through 2026.

The Global Pandemic Has Shaken Up a Dormant Market

Although the pandemic has brought about widespread spending changes internationally, emerging markets, in particular, have been a major driver behind the overall digital payment growth trend. Mature markets such as the UK and US have already had strong digital payment penetration, with the use of at least one digital payment by consumers sitting at 77% and 72%, respectively. Meanwhile, emerging markets such as India and Brazil have lagged far behind, at just 11% and 26%. There is ample room to grow digital payment share in these promising markets.

This article was written by

Altimetry profile picture
Altimetry is a boutique financial research and publishing firm providing individual investors with unique, unbiased investment recommendations and analytics.Sign up for our daily newsletter hereAssociated Accounts: Altimetry's data is provided by SA contributor Valens Research

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (6)

RedRock Asset Management GmbH profile picture
nobody following this stock since almost 1 year? why?
Adambombfx profile picture

Sorry, I sold out, 1,000 shares in December at $50.51 and have not been following since.
Adambombfx profile picture
Excellent article ! Thank you for the write up .....

I have been holding EVTC for 3 years now bought in at $13.62 for a long term hold !! EVTC has been good to me so far and will be even better when it hits $50 per share.
@Adambombfx - It’s seems like such an undervalued stock. I haven’t opened a position yet but have been looking at them for a few months now. I think their mercado libre partnership is good
Adambombfx profile picture

It sure has worked for me and I do see plenty of upside to come in the next few years.
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