Heartland Payment Systmems Inc. Harvard Case Solution & Analysis

In September 2008, Andrew Ferris, analyst Papillion Capital LLC, has been asked to assess the Heartland Payment Systems, Inc shares for possible inclusion in the Growth Fund justice services in Papillion. Heartland, provider of credit card payment, have been aggressively acquired new trading accounts with the expansion of direct sales after the initial public offering (IPO) in 2005. He concentrated his expansion plans for restaurants, brick and mortar retailers, convenience and liquor stores, car sales, repair shops and gas stations, professional service providers, and lodging facilities. In January 2008, management at Heartland revised down its forecast EPS guidance for 2008. Company compensates its sales force exclusively though commissions based on the performance of their trading accounts. Avondale Partners noted that Heartland paid about 92 percent of the estimated gross profits received from sales invoices, resulting in little free cash flow in the first year of the contract merchant. Avondale questioned the company's policy on the capitalization and amortization of signing bonuses and monthly residuals, rather than an expense immediately. In early 2008, Morgan Keegan & Co, an investment firm, has kept its target price for Heartland $ 26 - $ 29 per share.
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by Graeme Rankine Source: Thunderbird School of Global Management 12 pages. Publication Date: September 25, 2009. Prod. #: TB0025-PDF-ENG

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