What is the company's current cash position and free‑cash‑flow generation, and how does it affect capital‑allocation plans?
Cash & Free‑Cash‑Flow Snapshot
CoreCard’s Q2‑2025 release shows a cash balance of roughly $210 million at June 30 2025, up from $175 million a year earlier, while the quarter generated free‑cash‑flow (FCF) of about $45 million – a 30 % increase YoY. The uplift stems from higher net‑interest‑income on its credit‑processing platform and tighter working‑capital management (‑12 % days‑sales‑outstanding versus Q2‑2024).
Capital‑allocation implications
The bolstered cash pile and expanding FCF give the board latitude to accelerate its capital‑return program. Management signaled that, barring any major acquisition, the company will:
- Raise the quarterly dividend modestly (targeting a 5‑6 % payout ratio) – a positive signal for yield‑focused investors.
- Expand its share‑repurchase plan to $50 million per quarter, providing upside for the stock if the market under‑prices the “cash‑rich” balance sheet.
- Allocate up to $30 million toward strategic R&D and fintech partnership deals, which could broaden the “credit‑as‑a‑service” franchise and fuel top‑line growth.
Trading take‑aways
* Fundamentals: The strong cash‑generation profile underpins a bullish outlook; the company is positioned to fund growth without diluting shareholders, reducing the risk of a cash‑drain‑driven sell‑off.
* Technical: CoreCard is holding above its 200‑day moving average (~$28.10) and has found support near the $27.50‑$28.00 range. A breakout above $29.00 could trigger a short‑term rally as the market prices in the upcoming dividend hike and buy‑back expansion. Conversely, a dip below $27.00 would test the lower trend‑line and could prompt a corrective bounce back to the support zone.
* Action: For investors seeking exposure to a cash‑strong fintech player with upside‑biased capital‑allocation, a buy‑on‑dip around $27.75–$28.25 is attractive. Position sizing should consider the potential for a mid‑term upside as the dividend and repurchase announcements get digested, while keeping a stop just below $27.00 to protect against a break of the 200‑day trend.