EVERTEC is the payments and banking-technology utility of Puerto Rico. It was carved out of Banco Popular in 2010 and went public in 2013. It owns the ATH network, the debit network most Puerto Ricans use at ATMs and checkouts. It is the island's largest merchant acquirer, and it runs much of Popular's core banking and IT. Over the past three years it has used debt to buy Brazilian banking-software and fintech companies: Sinqia (2023), Tecnobank (2025, 75% owned) and Dimensa (April 2026). About 5,300 employees.
Four segments (FY25 mix is approximate): Latin America Payments & Solutions (~40%): card and ATM processing across 26 countries, plus core-banking, lending and investment software for Brazilian banks, insurers and asset managers. Business Solutions (~25%): core banking, network hosting, IT outsourcing and item/cash processing, mostly for Popular. Payment Services – PR & Caribbean (~18%): ATH network fees, card issuer processing and EBT. Merchant Acquiring (~17%): card acceptance for PR merchants, paid as a percentage of card volume.
How it makes money. Mostly recurring fees: a price per transaction, a percentage of merchant card volume, and monthly fees on multi-year software and processing contracts. Adjusted EBITDA margins are ~39–40%, and maintenance capex is low. The real cash costs are ~7% of revenue spent on capitalized software and a steady stream of acquisitions. Banco Popular is ~29% of revenue under a master services agreement that runs to Sept 2028.
Key sensitivities: the Popular renewal price in 2028, Puerto Rico consumer spending and card volumes, the Brazilian real and Brazilian bank IT budgets, floating-rate interest on ~$1.29B of debt, and the Puerto Rico tax grant that keeps its tax rate low.
What changed vs the 10/14 build: only the stock price. We found no new filing, guidance change, deal or rating action since yesterday, and the Q3 date hasn't been announced. The model was rerun on identical inputs. Base value is $26.67 (vs $26.66; the cent is rounding from the rebuilt code). Bear is $8.60 and bull $38.69 (vs $8.29 / $38.97, reconstruction noise), and the probability-weighted value is $25.16 (vs $25.15). The price went from $30.55 to $31.16, which moves the premium to base from +14.6% to +16.8%. That crosses the +15% line, so the label changes from SLIGHTLY RICH to OVERVALUED. Treat this as a label change. Our view of the company is the same as yesterday.
The screen sees ~8x earnings. An owner pays ~19x. FY26 guidance is $3.94–4.04 adjusted EPS but only $1.61–1.73 GAAP. Most of the ~$2.30/share gap is not one-off. About $80M/yr is amortization of acquired intangibles (EVTC buys its growth: Sinqia $417M, Tecnobank $144M, Dimensa $199M), and ~$31M is stock comp. Reported FCF of ~$204M excludes ~$68M/yr of capitalized software. True FCF after SBC is about $106M, a 5.7% yield on a $1.86B market cap. The company also carries ~$1.06B of net debt and leases plus $78M of minority interest.
The reverse DCF says $31 needs everything to go right. On our growth path, the price needs a permanent ~23.3% GAAP EBIT margin with the 5% Popular concession. That is above every year since FY22 (FY23–25 averaged 19.7%; FY26E clean is 22.5%). Alternatively it needs a clean Popular renewal plus a 22.3% margin, ~29% faster growth every year, or a WACC about 55bp lower in both phases, i.e. treating a Puerto Rico/Brazil processor at 2.5x leverage like a US compounder. The Street's $35.20 mean target (3 Buy / 3 Hold, $30–38) is pricing the bull case.
Why not more bearish: the franchise is real. ATH is effectively a monopoly network, the Brazilian core-banking software is sticky, EBITDA margins are ~40%, and FY26 revenue guidance was raised to +17%. Management bought back stock at ~$25. The business isn't broken. The problem is that the equity is only ~40% of enterprise value, so a full price on the business becomes an expensive price for the stock.
Call: AVOID new money at $31. Accumulate below ~$23 (about 15% under base, near where the buyback was running). Holders: trim into $33–35 (the 52-week high is $34.41 from 8/5), or write covered calls at the $35 strike (Dec/Jan), a price we'd sell at anyway. To get paid while waiting for entry, sell cash-secured puts at the $25 strike, 60–90 DTE. For a defined-risk bearish view, use a small Dec/Jan $35/$40 bear call spread. EVTC options are thin, so use limit orders at mid and keep size small. No naked calls. Next catalyst: Q3'26 earnings, expected early November (not yet announced; Q3'25 reported the first week of November). Watch whether the Oct-2026 Popular CPI escalator reset happens, Dimensa margins, and whether cyber and integration costs keep recurring.
| HIGH | Popular concentration / 2028 cliff. Banco Popular is ~29% of revenue, and the MSA runs to Sept 2028 (ATH 2030, ISO 2035). A 10% price cut already took effect in Q4-25. A 15% vs 0% renewal concession is worth $21.7–$29.2 per share. Short renewal concessions. |
| HIGH | Leverage in the equity. Net debt plus leases is ~$1.06B (2.5x adjusted EBITDA) on a floating-rate term loan. The equity is ~40% of EV, so a 10% move in EV is ~16% in the stock. Short higher-for-longer rates. |
| MED | BRL / Brazil country risk. Brazil is ~27% of revenue (estimate). ±15% on the BRL is worth roughly ±$1.9/share. Long BRL. |
| MED | M&A execution. Three Brazilian deals in three years, and goodwill ($1.07B) exceeds book equity. "One-time" integration costs keep coming back. Long synergy delivery; short impairment. |
| MED | Puerto Rico tax grant. The ~13% tax rate depends on PR incentives. The model glides it to a 20% terminal rate; at 25% the value is $24.8. |
| LOW | Cyber / operational. There was a cyber incident in Q2-26 (costs not disclosed). As a critical-infrastructure processor it carries a reputational tail, but the expected cost is small. |
| Steady EBIT margin ↓ / growth path → | 0.50× | 0.75× | 1.00× (base) | 1.25× | 1.50× |
| 18.0% → 17.5% | $11.9 | $14.3 | $16.8 | $19.6 | $22.6 |
| 20.0% → 19.5% | $16.0 | $18.7 | $21.7 | $25.0 | $28.6 |
| 22.0% → 21.5% | $20.1 | $23.2 | $26.7 | $30.5 | $34.6 |
| 24.0% → 23.5% | $24.1 | $27.7 | $31.6 | $35.9 | $40.6 |
| 26.0% → 25.5% | $28.2 | $32.2 | $36.5 | $41.3 | $46.6 |
| WACC (yrs 1–5 → stable) ↓ / terminal g → | 2.0% | 2.5% | 3.0% |
| 8.25% → 7.0% | $43.5 | $45.6 | $48.3 |
| 9.25% → 8.0% | $33.1 | $34.1 | $35.3 |
| 10.25% → 9.0% | $25.6 | $26.1 | $26.7 |
| 11.25% → 10.0% | $20.0 | $20.2 | $20.4 |
| 12.25% → 11.0% | $15.6 | $15.7 | $15.7 |
| Year | Rev | GAAP EBIT | Margin | Cap. software | % rev | OCF−capex | True FCF | SBC | FCF−SBC | Acq. |
| 2021 | 590 | 196.5 | 33.3% | 56.5 | 9.6% | 203 | 147 | 14.8 | 132 | 0 |
| 2022 | 618 | 157.4 | 25.5% | 55.5 | 9.0% | 193 | 137 | 20.0 | 117 | 44 |
| 2023 | 695 | 136.2 | 19.6% | 63.5 | 9.1% | 190 | 126 | 25.7 | 101 | 418 |
| 2024 | 845 | 165.7 | 19.6% | 63.0 | 7.5% | 235 | 172 | 30.3 | 141 | 34 |
| 2025 | 932 | 186.4 | 20.0% | 68.2 | 7.3% | 204 | 136 | 29.6 | 106 | 144 |
| TTM Q2-26 | 996 | 178.7 | 17.9% | 73.6 | 7.4% | 208 | 135 | 30.8 | 104 | 324 |
| 5-yr avg (FY21–25) | 168.4 | 23.6% | 144 | 119 | 128 | |||||
| FY23–25 avg (post-Sinqia) | 19.7% | |||||||||
| FY26E clean | 1,090 | 246 | 22.5% | adj. EBITDA 431 (39.5%) − SBC 31 − total D&A ~154. Transaction, cyber and severance one-offs excluded (estimate) | ||||||
| Yr | Revenue | g | EBIT mgn | EBIT | Tax | Reinvest | FCFF | WACC | PV |
| 2027 | 1,188 | 9.0% | 21.9% | 261 | 13% | 65 | 161 | 10.25% | 146 |
| 2028 | 1,271 | 7.0% | 21.9% | 278 | 13% | 55 | 187 | 10.25% | 154 |
| 2029 | 1,354 | 6.5% | 20.6% | 279 | 13% | 55 | 187 | 10.25% | 140 |
| 2030 | 1,435 | 6.0% | 20.6% | 295 | 13% | 54 | 203 | 10.25% | 137 |
| 2031 | 1,514 | 5.5% | 20.6% | 311 | 13% | 53 | 218 | 10.25% | 134 |
| 2032 | 1,590 | 5.0% | 20.5% | 326 | 14% | 50 | 229 | 10.00% | 128 |
| 2033 | 1,661 | 4.5% | 20.5% | 341 | 16% | 48 | 239 | 9.75% | 122 |
| 2034 | 1,728 | 4.0% | 20.5% | 353 | 17% | 44 | 248 | 9.50% | 115 |
| 2035 | 1,788 | 3.5% | 20.4% | 365 | 19% | 40 | 257 | 9.25% | 109 |
| 2036 | 1,842 | 3.0% | 20.4% | 375 | 20% | 36 | 264 | 9.00% | 103 |
| Base year: FY26E revenue (guide midpoint $1,085–1,095M) | $1,090 |
| Sum PV FCFF (2027–36) | $1,288 |
| Terminal value (g 3.0%, stable ROIC 11% → reinvest 27% of NOPAT, tax 20%, stable WACC 9.0%) | $3,746 |
| PV terminal value · share of operating value | $1,461 · 53% |
| Operating asset value | $2,749 |
| Risk-free (10Y UST) | 5.20% |
| Mature ERP | 4.40% |
| Country risk premium (revenue-weighted: PR ~0.5% on ~55%; Brazil ~3%, Mexico/Chile/Colombia ~1–3% on ~45%) | 1.50% |
| Unlevered beta (transaction processing / financial software) → relevered at D/E ~70% | 0.95 → 1.55 |
| Cost of equity | 13.5% |
| Pre-tax cost of debt (SOFR-based TLB) / after-tax at 13% | 6.60% / 5.74% |
| Weights E / D (market) | ~59% / ~41% |
| WACC yrs 1–5 → stable (beta → 1, leverage toward 2x, CRP fades), gliding over 2032–36 | 10.25% → 9.00% |
| Operating asset value | $2,749 |
| − Debt (TLB + revolver + short-term) | ($1,287) |
| − Lease liabilities | ($38) |
| + Unrestricted cash (restricted $29.7M settlement cash excluded) | $261 |
| − Minority interest (redeemable NCI incl. Tecnobank 25%, book) | ($78) |
| − Pensions | n.m. |
| Equity value | $1,608 |
| ÷ Diluted shares (59.75M outstanding + ~0.55M RSUs) | 60.3M |
| Value per share | $26.67 |
| Market cap / EV at $31.16 | $1,862M / ~$3,003M |
| EV ÷ FY26E adj. EBITDA ($431M) · EV ÷ FY26E clean EBIT ($246M) | 7.0x · 12.2x |
| Street (Robinhood 10/15): 3 Buy / 3 Hold / 0 Sell, mean target $35.20 ($30–38) | base is −24% vs mean |
| 52-wk range | $21.81 (6/5) – $34.41 (8/5) |
| Terminal g 3.0% < stable WACC 9.0% and < risk-free 5.2% | ✓ |
| TV share of operating value 53% (flag >70%) | ✓ |
| Stable ROIC 11% vs stable WACC 9% (+2pt, inside the sanity band) | ✓ |
| Y1 growth 9% vs FY26 guide +17% (inflated by Dimensa) and organic ~high-single-digit | ✓ fair |
| Reverse DCF: price needs a ~23.3% steady margin (vs 19.7% FY23–25), or growth ×1.29, or WACC −55bp | bull-ish |
| vs 10/14 build: base $26.66 → $26.67; price $30.55 → $31.16; gap +14.6% → +16.8% | consistent; label flips |