FOUR

We rate Shift4 Payments, Inc. (FOUR) as Avoid with a composite score of 37.2/100 at a current price of $58.50. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in stability (55th percentile) and value (50th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (20th percentile) and momentum (29th percentile) tempers our overall conviction. We assign a No Moat rating (32/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Shift4 Payments, Inc. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 37.2/100 places it at rank #3881 in our full 7,333-stock universe. At $6.8B in market capitalization, Shift4 Payments, Inc. is a mid-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 42%, though momentum at the 29th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 36% (-23.6pp vs sector) narrow to operating margins of 8% (+4.0pp vs sector) and net margins of 4.3%, yielding a gross-to-net conversion rate of 12%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $58.50, Shift4 Payments, Inc. is trading near fair value based on current fundamentals. Our value factor score of 50/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 24.2x (roughly in line with the sector median of 23.7x), EV/EBITDA of 15.8x (at a premium), P/B of 1.8x, P/S of 1.0x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a High uncertainty rating to Shift4 Payments, Inc.. Key risk factors include elevated market sensitivity (beta of 1.30), significant leverage (214% debt-to-equity), the combination of leverage (214% D/E) and thin margins (4.3% net) amplifies downside risk. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.30); significant leverage (214% debt-to-equity); the combination of leverage (214% D/E) and thin margins (4.3% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 55th percentile and quality factor at the 38th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate Shift4 Payments, Inc.'s capital allocation as Poor. Key concerns include elevated leverage (214% D/E), weak asset returns (ROA 1.8%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Shift4 Payments, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Shift4 Payments, Inc. receives a Avoid rating with a composite score of 37.2/100 (rank #3881 of 7,333). Our quantitative framework assigns a No Moat (32/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 39/100.

Our analysis does not support a constructive view on Shift4 Payments, Inc. at this time. The combination of limited competitive advantages, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.