Cash Machine Trading Cheap – Shift4 Payments Stock Set to Run?
We think Shift4 Payments (FOUR) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.
What Is Happening With FOUR
FOUR stock is available at a significant discount to its 3-month, 1-year, and 2-year highs. This can be attributed to macroeconomic pressures impacting transaction volumes in core verticals and Q1 2026 revenue guidance that significantly missed analyst expectations. Anticipated moderation in free cash flow conversion also weighed on sentiment.
The stock may not reflect it yet, but here is what’s going well for the company: Shift4 delivered record 2025 results with strong payment volume growth from international expansion and Global Blue integration. New venue contracts and global all-in-one payment solutions, alongside share repurchases, signal continued momentum.
FOUR Has Strong Fundamentals
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- Cash Yield: Shift4 Payments offers an impressive cash flow yield of 9.3%.
- Growing: Revenue growth of 23.2% over the last twelve months means that the cash pile is going to grow.
- Valuation Discount: FOUR stock is currently trading at 34% below its 3-month high, 56% below its 1-year high, and 63% below its 2-year high.
Below is a quick comparison of FOUR fundamentals with S&P medians.
| FOUR | S&P Median | |
|---|---|---|
| Sector | Financials | – |
| Industry | Transaction & Payment Processing Services | – |
| Free Cash Flow Yield | 9.3% | 4.0% |
| Revenue Growth LTM | 23.2% | 6.6% |
| Operating Margin LTM | 7.8% | 18.8% |
| PS Ratio | 0.8 | 3.4 |
| PE Ratio | 16.5 | 25.2 |
| Discount vs 3-Month High | -33.7% | -5.8% |
| Discount vs 1-Year High | -56.1% | -9.1% |
| Discount vs 2-Year High | -62.6% | -11.2% |
*LTM: Last Twelve Months
But What About The Risk Involved?
While FOUR stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. Four’s stock fell about 21% during the Covid crash but took a much harder hit in the inflation shock, dropping nearly 70%. Even with solid fundamentals, this kind of volatility shows the risks are still real. Market storms don’t always spare the favorites, no matter how strong they look on paper. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read FOUR Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
If you want to see more details, read Buy or Sell FOUR Stock.
Other Stocks Like FOUR
Not ready to act on FOUR? You could consider these alternatives:
We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- Positive revenue growth
- High free cash flow yield
- Meaningful discount to 3M, 1Y, and 2Y highs
A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have performed as follows:
- Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
- Win rate (percentage of picks returning positive) of >70% for both 6-month and 12-month periods
Portfolios Over Individual Stock Picks
Individual stocks can soar or tank but one thing matters: staying invested. The right portfolio can help you stay invested, capture upside and mitigate the downside associated with any individual stock.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? HQ Portfolio has posted more than 105% in cumulative return since inception, with less risk versus the benchmark index, as evident in HQ Portfolio performance metrics.