About Worldline SA

Historically, we’ve only written about companies headquartered in the United States or that have most (if not all) of their operations in the States.

That changes today!

Companies in foreign countries tend to be seldom discussed or analyzed by the American pundits; however, investors in the states could potentially be missing out on opportunities to buy shares in reputable, financially strong companies overseas. While it’s good to stay in your comfort zone and not assume any additional risk than you are comfortable tolerating, we want to play a role in informing you of some potential investment opportunities abroad.

We’re not telling you to invest in the company we’ll be analyzing in this article, we’re just putting them on your radar.

In this article we will be talking about Paris, France-based transaction and payment giant, Worldline SA. The company specializes in devices and machines that facilitate and complete transactions between consumers and businesses. The idea is somewhat similar to what was discussed in our article on Mastercard, however a main difference between the two companies is that Worldline makes the machines that Mastercard (among other companies) operates through. In that regard, Worldline facilitates the facilitator.

Now, it would make sense for you to assume that Worldline only does business in France and Europe as well; that’s not the case. The company has a substantial amount of business and operations in the United States–mainly in or at restaurants, banks, retail establishments (from what I’ve seen as a consumer out and about) and many other places of business across the country.

Whether you knew it before or not, Worldline is a huge company. In fact, according to some sources, the company is the largest transactional and payment company in Europe and the fourth largest in the world. This is likely due in large part to their ownership of a handful or large, strategic subsidiaries such as Ingenico, Equens, Atos and PaySquare.

Now you know a bit more about a French stock!

Let’s get a better idea of whether this European stock is worth holding a spot in your portfolio.

Worldline SA’s stock financials

The company has a current share price of around $39, a market capitalization of approximately $10.5 billion and a price-to-earnings (P/E) ratio of just above 55.

Right off the bat, we’ve objectively discovered that the company’s current share price is substantially overvalued. Specifically, it is generally accepted that a P/E ratio of 20 indicates that a stock is currently trading at its fair value or what it’s worth paying for, below 20 is undervalued, meaning you could potentially be buying shares in the company at a discount and above 20 is overvalued.

Worldline SA stock appears to be way overvalued currently.

However, that doesn’t mean that Worldline is not a quality company that you should consider investing in; it just means that relative to its actual value, shares in the company are expensive right now.

As it relates to Worldline’s balance sheet, the company maintains around $20 billion in total assets and just over $11 billion in total liabilities.

This seems particularly robust for a company with so many global operations product lines.

Onto the company’s income statement, their total revenue has increased each year since 2017, specifically starting at around $1.5 billion and extending all the way up to nearly $3.7 billion by the end of the year of 2021.

An additional positive can be found on Worldline’s cash flow statement, as their net income has been positive each year since 2017 as well. When a company has more (let alone positive) net income, they are able to invest in new product lines, use proceeds to offer investors a dividend, reinvest in other product lines, fuel growth by buying out other companies or engaging in other shareholder-friendly activities.

Another notable point of positivity that can be found on the company’s cash flow statement is their total cash from operations. Specifically, it has risen substantially over the past five years from $286 million in 2017, increasing each year up to $982 million in 2021. Especially in the current market environment, it’s never a bad thing to stow away some cash for a rainy day.

Worldline SA’s stock fundamentals

They say that money talks in every language and we believe that regardless of where someone is from, making a profit is never a bad thing.

It’s a good thing that Worldline SA has a decent ability to turn a profit.

Specifically, the company’s five-year average net profit margin is basically in line with the industry. However, their trailing twelve month (TTM) returns on equity, assets and investment aren’t as appealing. For instance, the company’s TTM return on assets is around 1% to the industry’s nearly 5% and their TTM return on investment is 1.4% to the industry’s 8.6%.

This is somewhat discouraging to our team. Typically, we’ve seen companies with very similar returns when compared to the industry as a whole, but when some of a company’s most crucial metrics are considerably lower than the industry, we aren’t exactly optimistic about the future.

These lackluster returns could be a result of the intense competition between payment processing and transactions industry or the less attractive scenario, the company has financial or operating deficiencies   that need to be fixed. All in all, for us to want to pick up a few shares of Worldline we’d definitely need to see their returns in more favorable territory.

Should you buy Worldline SA stock?

This company is a payment processing giant with a lot of valuable subsidiaries that are likely to keep this company operating moving forward. However, it’s a matter of what the company and management can achieve during long periods of time and given a few of their key financial ratios and metrics, it seems like there isn’t a long list of things to be excited about as a long-term investor.

It’s also not very encouraging that the company’s stock is quite overvalued according to its current P/E ratio.

However, the company does maintain a solid balance sheet which can enable them to make some more strategic acquisitions and increase their overall presence in the market, ultimately allowing the company to achieve higher profitability and returns.

While there might be a better opportunity to buy shares in Worldline in the future, given all of the aforementioned information, we give the company a “sell” rating.

DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.