Corpay Inc. (NYSE: CPAY), formerly FleetCor Technologies, operates as the world’s leading enterprise payments provider. The company provides specialized solutions across vehicle payments (vehicle fuel and maintenance), accommodation payments, and corporate payments (including cross-border transactions, accounts payable automation, and foreign exchange services). Corpay’s revenue is estimated to be about $4.5 billion in fiscal 2025, which may or may not be finalized when the company reports its results after the close of trading this Wednesday. The bull’s success hinges on the company’s ability to decisively shift its revenue mix toward higher-growth corporate payments, while maintaining a durable and cash-generating vehicle payments base (“vehicle payments” is what the company now calls its traditional fleet business). This strategy is probably the reason for the company name change. However, while the traditional fleet business continues to account for a large share of revenue, 51% of what was previously known as “Fleet” versus 31% for “CorPay.” (Source: June 2025 Investor Presentation) Organic revenue growth accelerated throughout 2025, reaching 11% in the third quarter. This is an improvement of 500 basis points year-over-year and is driven by our Vehicle Payments division, particularly our US business. This is important because tracking a company’s growth over the past five years based solely on sales is complicated by significant M&A activity. The company is a serial acquirer, which would be acceptable if transactions were increasing. Corpay has completed its acquisition of Alpha Group, acquiring a 34% stake in AvidXchange, a $450 million revenue AP automation and payment solutions provider, with an option to purchase the remaining shares. The company will also sell some divisions. For example, most recently, the company sold a division to Mastercard for $300 million, a sale that closed in early December 2025. Integration of acquisitions could be a cause for concern. However, net debt has increased to about $6 billion as of the quarter ending September 30 (latest numbers available this week). Free cash flow, which peaked at about $1.9 billion in fiscal 2023, has declined but is expected to rebound this year to just under $1.7 billion. Assuming that is achieved, FCF/EV would be a respectable 5.9%, but achieving this and projecting adjusted EPS of $24.47 would require ~33% margin, a feat the company has achieved only once in the past decade (FY2020). Even assuming the company has maintained its average profit margin since then, adjusted EPS for fiscal 2026 would be nearly $21, implying a forward P/E ratio of approximately 15x. Unfortunately, the “lit market,” or bid/sell spread on CorPay options, is quite wide, so mid-market limit orders are required to achieve good execution. However, you will notice that one reason to consider using call spread risk reversal is illustrated in the diagram below. We can see that the magnitude of downside risk, shown in the payoff diagram to the right of the price chart, is relatively small when using this structure in price ranges below the currently traded price range. That is, unless the stock price falls far below the lower end of its six-month trading range compared to the profit opportunity if the stock performs well on earnings. In other words, assuming you subscribe to the bullish thesis, you’ll probably be more meaningfully participating in price appreciation from here on out (referring to a larger portion of the profits) than you’d be willing to risk, at least for the first 10% or so downside. Disclosure: None. All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, its parent or affiliates, and may have been previously disseminated on television, radio, the Internet, or another medium. The above is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The Content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
