ACI WORLDWIDE $44.87 - Nasdaq symbol ACIW

ACI WORLDWIDE $44.87 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 39.4 million; Market cap: $1.8 billion; No dividends paid) makes software for processing transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. Its products also help cut fraud.

In mid-February 2012, ACI completed its $540- million purchase of S1 Corp. This acquisition has been a good fit: S1 sells transaction software for banks, credit unions, retailers and other payment processors. It has over 3,000 clients worldwide.

In the third quarter of 2012, ACI’s revenue rose 38.3%, to $155.1 million from $112.1 million a year earlier. S1’s $47.8-million contribution was the main reason for the gain.

Without one-time items, earnings per share fell 6.6%, to $0.29 from $0.31. The decline was largely due to the cost of integrating S1. The company has now completed most of this work.

ACI holds cash of $87.7 million, or $2.22 a share. Its long-term debt of $369.0 million is a low 20.5% of its market cap.

The company is well positioned to profit from global growth in payment processing. It recently signed a contract to supply software for State Bank of India’s ATM Network. This bank, which is India’s largest, plans to increase the size of its ATM network to 60,000 units by 2017. It is especially concerned about combating fraud.

ACI’s outlook is positive. However, the stock is up almost 57% in the past year and now trades at a high 28.8 times the company’s forecast 2013 earnings of $1.56 a share.

ACI Worldwide is a hold.

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