ACI WORLDWIDE $57.16 - Nasdaq symbol ACIW

ACI WORLDWIDE $57.16 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative) (402-334-5101; www.tsainc.com; Shares outstanding: 38.5 million; Market cap: $2.2 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 the quarter ended December 31, 2013, ACI’s revenue rose 26.4%, to $283.2 million from $224.1 million a year earlier. That’s mainly due to the contribution from Online Resources Corp., which ACI bought for $126.6 million early last year. Earnings per share rose 3.2%, to $1.30 from $1.26.

ACI has made a number of recent acquisitions: in February 2012, it bought S1 Corp. for $540 million. S1 sells transaction software for banks, credit unions, retailers and other payment processors. It also recently bought Official Payments Holdings for $109 million. Official Payments processes about 20 million payments totalling over $9 billion annually.

ACI’s long-term debt of $708.1 million is a reasonable 32% of its market cap. But the company’s goodwill and intangibles now stand at $906.9 million, or a high 41% of its market cap.

The company’s outlook is positive, but the stock trades at a high 23.8 times forecast 2014 earnings of $2.40 a share. Any problems with integrating its acquisitions could reduce that estimate significantly.

ACI Worldwide is a hold.

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