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Stock picker thirst for Worldpay (LSE: WPG) has headed to the stars in recent sessions, a blistering reception to full-year financials helping the payment processor to hit seven-month highs.

Worldpay saw revenues soar 15% in 2016, to £4.5bn, it advised last month, with the number of transactions on its books rising 14% to 14.9bn.  

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The company’s Global eCom division was the standout performer, and revenues here streamed 22% higher as transaction volumes leapt 30%. But this was not the only cause for celebration, as net revenues at its British WPUK and North American WPUS divisions rose 8% and 16% respectively.

And while the company’s New Acquisition Platform (or NAP) has been subject to some delays, Worldpay reassuringly advised last month that it remains on track to transfer the majority of its clients by the close of 2017. The new platform will give the company improved cross-selling opportunities and the ability to gain market share.

So while slowing from the 50% earnings advance enjoyed in 2016, City brokers still expect the bottom line at Worldpay to keep swelling at a terrific rate.  Indeed, a 10% advance is chalked-in for the current year, and a 15% rise is forecast for 2018.

Current projections leave Worldpay dealing on a P/E ratio of 21.8 times, above the yardstick of 15 times that is widely considered attractive value. But I believe Worldpay is still an attractive pick, despite its heady valuation.

The firm is investing heavily to maximise the benefits from an increasingly cash-less world (indeed, JP Morgan expects card transactions to continue rising by around 7% per year during the next few years at least). And the relentless growth of e-commerce should also fuel titanic revenues expansion at the London firm.

Micro but mighty

For some years now Micro Focus International (LSE: MCRO) has cheered investors with splendid, double-digit earnings growth. And helped by its planned merger with Hewlett Packard Enterprise (HPE) Software, the number crunchers expect the bottom line to keep on charging.

For the year to April 2017, a 15% ascent is currently predicted. And while earnings growth is expected to cool to 4% in fiscal 2018, Micro Focus is expected to buckle down and deliver a 14% rise the following year.

And I do not consider a forward P/E ratio of 17.1 times to be exorbitantly expensive given the exceptional sales opportunities afforded by the Micro Focus tie-up with HPE Software. Not only does the move improve the tech titan’s product mix, but the merged operations also allow plenty of cross-selling options for the enlarged business. Micro Focus is seeking to push the deal through by the third quarter of 2017.

While investors may be concerned by HPE Software’s continued underperformance, and therefore question the merits of any deal, Micro Focus has a solid history of acquiring battered businesses and turning them around. And given the scale of HPE Software, success here could prove a game-changer for the Newbury-based business.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Micro Focus and Worldpay. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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