Pick · 9.0% · large · Consumer Discretionary · last 406.20
Entry 396.00–408.00 · Stop 378.00 · Target 460.00 · Buy ≈ 11 shares (≈ $4,468 at 406.20)
Thesis (long, position, conviction 64)
Bull: Corpay delivered 21% revenue growth and 10% organic growth in Q2 2026, with adjusted EBITDA up 24% and adjusted diluted EPS up 36% to $7.00, prompting management to raise FY2026 revenue guidance to $5.29-5.33B and adjusted EPS guidance to $27.15-27.55 (F-CPAY-1, F-CPAY-2, F-CPAY-5, F-CPAY-6). Leverage is moderate at 2.55x and the company returned capital via $321M of buybacks in the quarter alone (F-CPAY-7), signaling confidence and balance-sheet capacity. Technically, the stock is in an uptrend: trading above its 20/50/200-day moving averages, up 11.05% over three months and outperforming SPY by nearly 7 points over that window, with RSI at a neutral-to-firm 55.8 that leaves room to run before overbought (F-CPAY-9, F-CPAY-10). The GAAP net income decline was driven by a one-time $100M FTC charge rather than operating deterioration, so underlying profitability trends (adjusted EBITDA/EPS) are accelerating, not slowing (F-CPAY-3, F-CPAY-4, F-CPAY-5).
Bear: The $100 million FTC Bureau of Consumer Protection charge remains a preliminary settlement pending customary approval, so final terms, additional remediation costs, or conduct findings could still surprise negatively (F-CPAY-4). GAAP net income fell 13% y/y even with strong top-line growth, showing a widening gap between GAAP and adjusted metrics that warrants scrutiny of add-backs (F-CPAY-3, F-CPAY-5). The balance sheet shows $16.959B of current liabilities against only $3.164B of cash as of June 30, 2026 (F-CPAY-8); the brief does not clarify how much of this reflects normal card-float/settlement liabilities typical of a payments business versus other short-term obligations, which is a real data gap. The stock has already run up (4.48% off its 52-week high, trading above all key moving averages) and sits close to its 50-day average, so near-term upside may be partly priced in ahead of the November 11 earnings print (F-CPAY-9, F-CPAY-11).
Valuation: At $406.20 against FY2026 adjusted EPS guidance of $27.15-$27.55, CPAY trades around 14.7-15.0x forward adjusted earnings while guiding to ~21% revenue growth and mid-30s% adjusted EPS growth in the most recent quarter (F-CPAY-1, F-CPAY-5, F-CPAY-6, F-CPAY-9). That multiple looks reasonable-to-cheap relative to the growth and margin expansion shown, assuming adjusted EPS is a fair proxy for underlying earnings power once the one-time FTC charge rolls off; the brief does not provide FCF or a GAAP-based multiple for cross-check, so this view leans on adjusted figures only.
undated: Resolution/finalization of the preliminary FTC Bureau of Consumer Protection settlement (currently pending customary approval)
Facts
F-CPAY-1: Revenue for the quarter ended June 30, 2026 was $1.339 billion, up 21% from $1.102 billion in the year-earlier quarter. (as of 2026-08-05)[E6343]source
F-CPAY-2: Organic revenue growth was 10% in the quarter ended June 30, 2026. (as of 2026-08-05)[E6343]source
F-CPAY-3: GAAP net income for the quarter ended June 30, 2026 was $248.3 million, down 13% from $284.2 million a year earlier. (as of 2026-08-05)[E6343]source
F-CPAY-4: Corpay reported a $100 million charge in Q2 2026 for a preliminary settlement with the FTC's Bureau of Consumer Protection, subject to customary approval. (as of 2026-08-05)[E6343]source
F-CPAY-5: For the quarter ended June 30, 2026, adjusted EBITDA rose 24% year over year to $767.2 million, and adjusted diluted EPS rose 36% to $7.00. (as of 2026-08-05)[E6343]source
F-CPAY-6: On August 5, 2026, Corpay raised its fiscal 2026 revenue outlook to $5.290–$5.330 billion and adjusted diluted EPS outlook to $27.15–$27.55. (as of 2026-08-05)[E6343]source
F-CPAY-7: Management reported 2.55x leverage at the end of Q2 2026 and said Corpay repurchased 1 million shares for $321 million during the quarter. (as of 2026-08-05)[E6343]source
F-CPAY-8: At June 30, 2026, Corpay reported $3.164 billion in cash and cash equivalents and $16.959 billion in current liabilities. (as of 2026-06-30)[E6323]source
F-CPAY-9: CPAY closed at $406.20 on October 15, 2026, 4.48% below its 52-week closing high; the close was above its 20-day, 50-day, and 200-day moving averages of $397.52, $404.29, and $350.81, respectively. (as of 2026-10-15)[E5703]
F-CPAY-10: CPAY's trailing three-month return through October 15, 2026 was 11.05%, and its reported three-month relative strength versus SPY was 6.96%. (as of 2026-10-15)[E5703]
F-CPAY-11: Corpay's next listed earnings date is November 11, 2026, after market close; the listed Q3 2026 EPS estimate is $7.3415. (as of 2026-10-15)[E6324]
What would change the view
A confirmed final FTC settlement materially above $100M or with ongoing compliance costs
Q3 2026 results showing organic revenue growth decelerating meaningfully below the 10% Q2 pace
A sustained close below $390 (below both 20- and 50-day averages) on rising volume
Clarification that the $16.959B current liabilities figure is not primarily normal payments float but reflects genuine liquidity strain
Data quality
Quality score 96/100.
Gap: The quote block is timestamped October 16, 2026, after the pack's stated date of October 15, 2026, so it is not used; the October 15 daily close is used instead.
Gap: The provided financial results extend through June 30, 2026; no subsequent quarter's reported financial results are included.
Red flag: Corpay recorded a $100 million charge in Q2 2026 for a preliminary FTC Bureau of Consumer Protection settlement; customary approval was pending when the results were announced. [E6343]