1. The Move
ACI Worldwide just yesterday closed at its all-time high of $39.37:
It’s up about 27 bags from the February 2003 low of $1.42.
2. Business Description
ACI Worldwide, the Universal Payments (UP) company, powers electronic payments for more than 5,100 organizations around the world. More than 1,000 of the largest financial institutions and intermediaries, as well as thousands of global merchants, rely on ACI to execute $14 trillion each day in payments and securities. In addition, myriad organizations utilize our electronic bill presentment and payment services. Through our comprehensive suite of software solutions delivered on customers’ premises or through ACI’s private cloud, we provide real-time, immediate payments capabilities and enable the industry’s most complete omni-channel payments experience. To learn more about ACI, please visit www.aciworldwide.com.
3. Fundamental Situation at Bottom & Top
4. Brief Story
At the bottom, ACI Worldwide was undervalued, being profitable, and Net Cash positive by $90 M. The p/e multiple was just 11, and the EV/EBITDA was about 1.
Now the EV/EBITDA multiple is 16, and the company has a Net Debt of $1,286 M. The earnings multiple expanded from 11 to 41. Also, the price to sales ratio came from 0.5 to 3.4.
This story is about multiple expansion.
I should notice just one more aspect… before the bottom, ACI Worldwide had Net Losses in 2000 and 2001 (-$50 M and -$80 M, respectively) and it turned profitable in 2002 ($15 M); however, the stock trend continued to be down until the reversal in February 2003.
Even if a company comes from deep losses to profits, that doesn’t mean the stock trend will reverse immediately. It may test your patient, your hands, and your conviction before it finally changes.