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3 compelling ASX payment shares rated as buys

Payment Technology
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There are a number of ASX payment shares that have been rated as buys.

Some payment businesses are completely changing how people pay for things. However, there are others that are simply improving on what already exists.

Tyro Payments Ltd (ASX: TYR)

Tyro Payments is a business that provides payment terminals for businesses to accept payments from customers. There are lots of cafes, restaurants or other businesses that are currently using a payment terminal from Tyro.

It’s currently rated as a buy by the Motley Fool Blast Off service.

The company recently signed a deal with Bendigo and Adelaide Bank Ltd (ASX: BEN) to take over the bank’s payment terminal which will add around 26,000 to its Tyro’s national terminal network.

In Tyro’s most recent weekly update, the company said that its transaction value had grown by 15% in November so far. October’s transaction value grew by 10%.

At the ASX payment share’s AGM it revealed that it had more than 33,200 active merchants at 30 September 2020, an increase of 8% compared to last year.

It said that its transaction value to 23 October 2020 grew 5% to $6.8 billion compared to the same period last year. That included NSW transaction value growth of 8% whilst Victoria was down 35%.

The Tyro share price is still down 6% from where it was on 21 February 2020. But it has gone up 267% since 23 March 2020.

EML Payments Ltd (ASX: EML)

EML is an ASX payment share that offers various payment products including physical gift cards, digital gift cards, general reloadable cards, virtual account numbers, salary packaging, disbursements, gaming payouts and so on.

The company is currently rated as a buy by the Motley Fool Extreme Opportunities service.

EML recently gave a trading update for the first quarter of FY21. It said that first quarter revenue was $40.6 million, up 75% over the prior corresponding period and it was 20% higher than the fourth quarter of FY20. It also said that its earnings before interest, tax, depreciation and amortisation (EBITDA) of $10 million was up 215% compared to the prior corresponding period and up 69% compared to the fourth quarter of FY20.

EML Payments’ share price is still down 35% from 18 February 2020. However, it has risen by 171% since 23 March 2020.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is a digital giving business which facilitates donation payments predominately to large and medium US churches.

The business is currently rated as a buy by the Motley Fool Pro service.

Pushpay is steadily winning over more churches and more people are utilising the digital donation service in this COVID-19 period of social distancing. The Pushpay service also provides a livestreaming service so that churches can stay in contact with their congregations.

The ASX payment share boasts of rising profit margins. In the recent FY21 half-year result, Pushpay increased its gross profit margin from 65% to 68%. It also managed to increase its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin from 17% to 31%.

Pushpay itself said it expects “significant operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low.”

The Pushpay share price has risen by 160% since 16 March 2020.

Looking at the estimated on Commsec, Pushpay is valued at 24x FY23’s estimated earnings. The company is aiming for a 50% market share of large and medium US churches, which could mean US$1 billion of annual revenue per year.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX and Tyro Payments. The Motley Fool Australia has recommended EML Payments and PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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