Year-to-date, shares of Intelligent Systems Corporation (INS), a Norcross, Georgia-based operator of CoreCard Software, a prepaid card and credit card processing service, decreased by around 3%, losing the match against the market, which instead rose by 11%.
Based on the catalysts described below, the share price seems poised for a strong rebound, most likely before the end of the year.
Growth In 2020
In 2020, Intelligent Systems posted a 5% year-over-year increase in total revenues to $35.9 million, up from $34.3 million in full year 2019. Net income fell 25% to $8.2 million or $0.91 per share in 2020.
In light of key investments the company made last year, 2021 revenue growth is expected to come in at 20% or more, providing a solid base for strong advancement of its net income as well.
Given the following market valuations, which show that the current share price is reasonable, it appears that Intelligent Systems is a compelling investment.
Shares are changing hands for $38.71 apiece, trading below the 50-Day Moving Average of $39.24 and the 200-Day Moving Average of $40.04. Additionally, the market capitalization lands at around $343.8 million.
As part of its growth strategy to expand the business internationally, the company has opened a subsidiary of CoreCard Software in Dubai, U.A.E. That will help open new markets to the processing services of CoreCard, including markets in the Middle East as well as those in Europe, Africa, and the Asia Pacific.
CoreCard uses systems which provide services to many multi-currency prepaid and credit cards that customers are currently using in numerous regions.
What’s more, Intelligent Systems is based in Georgia, where more than 70% of the total American transactions through debit, credit and gift cards are processed every year. The company uses proprietary software solutions, which are also being sold to others.
Wall Street’s Take
In the last three months, one Buy rating has been assigned by a Wall Street analyst. Therefore, Intelligent Systems is a Moderate Buy. The analyst set a $58 price target, implying the stock has a 50% upside potential. (See Intelligent Systems stock analysis on TipRanks)
Moreover, Intelligent Systems has earned a TipRanks Smart Score of 8, indicating that it will likely outperform the market. The Smart Score analyzes stocks based on eight factors extracted from TipRanks’ unique datasets.
This provider of prepaid and credit card processing services is based in an area where more than 7 out of 10 U.S. transactions via credit, debit, and gift cards are processed every year.
In 2020, the company made a huge step forward regarding its plan to expand its operating activities to international markets, opening an office in Dubai that will provide strategic support in achieving its goal. Once the company has completed the creation of its business in the EMEA area, total revenues are expected to be 1.20 to 1.25 times the level seen in 2020, which should have positive consequences for the share price.
Disclosure: On the date of publication, the author did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.