EVERTEC, Inc. (EVTC): what the price requires

The current priced-in claim for EVERTEC, Inc. (EVTC) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/EVTC

Headline

FieldValue
TickerEVTC
CompanyEVERTEC, Inc.
Current price$29.49/sh
CompositionPayment Services - Puerto Rico & Caribbean 16% / Latin America Payments and Solutions 37% / Merchant Acquiring, net 20% / Business Solutions 27%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed3.0%
Operating margin today20.1%
Margin compression implied-17.1pp
Multiple paid14x operating income

The operating-margin requirement is derived from the framework's value band at year 10, a separately labeled basis from the headline growth/duration solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 6.7% sits below it).

Reconcile: at the x-ray's 9.3% required return this reads ~5.5%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.83σ
cohort percentile (of 178 peers)17
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.29x5expensive
Earnings1.31x5expensive
Relative0.42x5justifies
Growth0.78x2justifies

Families that justify the price: Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.3%); the inversion above states its own rate.

Per-Model Detail (n=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
DCF Exit MultipleGrowth$55.610.53xyesExit EV/EBITDA: 6.5x / 8.5x / 10.5x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$70.220.42xyesP/E 26.56x (blended: static sector reference 35x + trailing (TTM) 14x), scenarios: 22.2x / 26.6x / 31.0x (bear / base = reference held flat / bull), EV/EBITDA 18.41x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$22.911.29xyesBV/sh $10.68, ROE (TTM) 19.8%, ke 9.3%
Two-Stage Excess ReturnAsset$33.210.89xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$28.601.03xyesRev $1.0B, growth 9% (input: historical growth; tapered), Terminal P/S: 1.6x / 1.9x / 2.3x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$24.961.18xyesEPS $2.08, growth 7% (input: historical EPS growth), PEG=1.94 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$26.321.12xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.17B × (1−15%) / WACC 6.3% → EPV (no growth)
Residual IncomeAsset$32.200.92xyesBV $10.68 + 5yr PV of (ROE (TTM) 19.8% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$22.361.32xyes√(22.5 × EPS $2.08 × BVPS $10.68) — Graham's conservative floor
EV/EBITDA RelativeRelative$111.710.26xyesEBITDA $0.31B × sector EV/EBITDA 25.0x
FCF YieldEarnings$21.001.40xyesFCF $197.3M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$15.821.86xyesSBC-adj FCF $0.17B (FCF $0.20B − SBC $0.03B) capitalized at Kₑ
Ben Graham FormulaEarnings$39.810.74xyesEPS $2.08 × (8.5 + 2×7.2%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$4.356.78xyesBV $10.68 × (ROIC 2.6% / WACC 6.3%)
P/Sales SectorRelative$121.570.24xyesRevenue $0.95B × sector P/S 8.0x
PEG Fair ValueRelative$22.371.32xyesEPS $2.08 × (PEG 1.5 × growth 7.2% (input: historical EPS growth)) → PE 10.8x
Earnings YieldEarnings$22.491.31xyesEPS $2.08 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$813.9m
Net debt / NOPAT (after-tax)5.07x
Net debt / operating income (pre-tax)4.33x
Interest coverage2.8x
Share count CAGR (buyback)-3.7%
Burning cashno

Bullet Takeaways

Bull Case

Evertec is best read as a mature, cash-generative payments utility that happens to own a growth engine. The stage frames the numbers: this is not a speculative fintech but a profitable processor with a roughly 20% return on equity, real free cash flow of about $197 million, and a share count it has been shrinking by roughly 3.7% a year. Payments processing is a toll business, earning a slice of every transaction across its network, and the secular tailwind is durable. The filing points to the ongoing "shift to digital payments" and to channel connections into Brazil's instant-payment rails, noting it has "developed multiple channel options to connect to Brazil's fastest instant money transfer system called PIX". As cash gives way to digital across Latin America, a processor positioned on the rails participates in the volume growth without taking the consumer's credit risk.

The Latin America segment is where the growth narrative lives, and it is accelerating. First-quarter 2026 revenue rose 8% to $247.9 million, adjusted EBITDA grew 9% to $97.0 million, and management projected the Latin America segment to grow revenue in the high 30s on a reported basis, lifted by the Tecnobank acquisition and the just-completed purchase of Dimensa, a Brazilian B2B technology provider for financial institutions. The home base in Puerto Rico, meanwhile, keeps generating dependable payment activity that funds the regional expansion. A business using stable, high-margin domestic cash flow to acquire and build a faster-growing international footprint is compounding from two directions.

The valuation is the part the bull leans on hardest, because for once the methods agree. At roughly 13 times company-wide operating income, every valuation family supports the price: asset value, earnings power, peer multiples, and forward growth all land at or above it. That is rare and it is the opposite of a stretched stock. The inversion treats the price as a floor, sitting below what even a 5%-a-year decline in operating profit would warrant. Pair a low entry multiple with a 20% return on equity, steady buybacks, and a genuine Latin America growth engine, and the bull case does not need a re-rating to work; it needs the company to keep doing roughly what it just did.

Bear Case

The macro variable with the most leverage on Evertec is geographic, and it is structural. The company's foundation is Puerto Rico, an island economy with its own demographic and fiscal pressures, and a payments processor tied to a single small economy lives and dies with that economy's transaction volumes. The expansion into Latin America reduces the dependence over time but adds a different exposure: currency risk and political risk across multiple emerging markets. The first quarter showed both edges of that trade, with revenue up 8% on a reported basis but only 5% in constant currency, a four-point gap that is the foreign-exchange tailwind which can reverse into a headwind in any quarter. Growth bought partly through currency translation is growth that the next move in the dollar can take back.

The acquisition-led model carries its own risks. Evertec's Latin America growth leans heavily on deals such as Tecnobank and Dimensa, and a roll-up strategy must integrate acquired platforms, retain their customers, and earn its cost of capital on the purchase price, none of which is guaranteed. The leverage that funds those deals is meaningful: net debt near $814 million sits at about four and a half times operating income, with interest coverage around 2.6 times. That is manageable for a steady cash generator but it is not comfortable, and it limits how aggressively the company can keep acquiring without straining the balance sheet or diluting shareholders.

The earnings quality deserves a closer look than the adjusted headline suggests. GAAP net income actually fell 27% in the quarter to $23.8 million even as adjusted EBITDA rose, a divergence the filing attributes in part to prior-year "gains recorded in the current year from the benefit of tax credits" that flattered the comparison. The methods do all support the price, so the bear here is not an overvaluation argument; it is that a low multiple can be the right price for a business with concentrated geographic exposure, currency-dependent reported growth, and an acquisition appetite that the balance sheet can only partly fund. The market may be discounting Evertec for reasons that are real rather than mistaken.

Valuation

Evertec is the unusual case where the valuation methods do not argue. At about 13 times company-wide operating income, every family supports the price: asset value, earnings power, peer multiples, and forward growth all land at or above today's level. The inversion reads the price as a floor, below what even a 5%-a-year decline in operating profit would justify. In plain terms, the market is not paying for growth at all; it is paying a discount to what the cash flows are worth on standard measures, which is the profile of a value-supported name rather than a momentum one.

The way to interpret that agreement is to ask why a profitable payments processor with a 20% return on equity trades so cheaply, and the answer sits in the risk, not the earnings. A low multiple on a steady cash generator usually reflects a market discounting something specific: here, the geographic concentration in Puerto Rico, the currency exposure of the Latin America growth, and the leverage funding the acquisitions. The peer comparison is of limited help because the available cohort is a grab-bag of IT-services names rather than direct payments comparables, so the cleaner read is the absolute one: 13 times operating income is inexpensive for a business growing revenue in the high single digits with a fast-growing international segment, and the discount is the compensation for the concentration and currency risk.

Solvency is the boundary and it is the reason the cheap multiple is not a free lunch. Net debt near $814 million at about four and a half times operating income, with interest coverage around 2.6 times, is the constraint a buyer accepts: it funds the deal pipeline but leaves limited room for a soft stretch in transaction volumes or an adverse currency move. The company generates real free cash flow and is buying back stock, which is what makes the low multiple compound in the owner's favor, but the balance sheet is the line that bounds how much can go wrong before the discount stops looking like value.

Catalysts

The first quarter of 2026 reinforced the growth-from-Latin-America story. Evertec reported revenue of $247.9 million, up 8% and 5% in constant currency, with adjusted EBITDA of $97.0 million, up 9%, and adjusted EPS of $0.90, up 3%. GAAP net income fell 27% to $23.8 million against a year-earlier period flattered by tax-credit benefits, a reminder to read the adjusted and reported lines together. Management raised full-year 2026 guidance to revenue of $1,073 to $1,085 million and adjusted EPS of $3.86 to $3.98, and projected the Latin America segment to grow revenue in the high 30s on a reported basis.

The deal pipeline is the other catalyst. Evertec completed its acquisition of Dimensa, a B2B technology provider for Brazilian financial institutions, adding to the earlier Tecnobank purchase and deepening its Brazil footprint alongside its PIX instant-payment connections. Analyst sentiment is cautious, fitting a stock the market already prices at a discount: the consensus rating is Hold, and Morgan Stanley recently lowered its target to $25 with an Equal-Weight rating, while the broader average target sits above the current price. The catalysts that matter from here are integration of the Brazilian acquisitions and the trajectory of Latin America volumes; both determine whether the cheap multiple re-rates or simply stays cheap for the concentration and currency reasons the market is weighing.

Peer Cohorts (Per Segment, With Filing Citations)

Payment Services - Puerto Rico & Caribbean (reported)

Latin America Payments and Solutions (reported)

Merchant Acquiring, net (reported)

Business Solutions (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 results, May 2026 · analyst notes, June 2026

View the full interactive EVTC report on boothcheck