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Why You Should Retain Global Payments (GPN) Stock for Now
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Global Payments Inc. (GPN - Free Report) is well poised to grow on the back of strategic acquisitions and partnerships. Its massive cash flow generating ability bodes well. Also, the rising demand for digital payment solutions is a huge positive.
Global Payments — with a market cap of $34.9 billion — is a payment solutions provider based in Atlanta, GA. It provides innovative software and services all around the globe. The payments technology company has a massive network including North America, Latin America, Europe and the Asia Pacific.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Trend in Estimates
The Zacks Consensus Estimate for Global Payments’ 2021 earnings is pegged at $8.17 per share, indicating a 27.7% year-over-year rise. The company beat earnings estimates in each of the last four quarters, with the average being 3.6%.
Furthermore, the consensus mark for earnings is $9.62 per share for 2022, indicating a 17.8% year-over-year rise.
VGM Score
GPN currently has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Growth Drivers
The coronavirus pandemic has triggered a massive increase in digital payments over the last few quarters. The momentum is not expected to subside anytime soon. Also, increased security and easy availability will keep demand for digital payment solutions high, which will continue supporting Global Payments’ revenue growth. GPN projects adjusted net revenues within $7.71-$7.73 billion for this year compared with the previous guided range of $7.70-$7.73 billion, indicating 14-15% growth from the 2020 reported figure.
Ongoing investments in technology have led to a shift in Global Payments’ business mix toward technology enablement, which represented 60% of the company’s 2020 revenues (up from 30% in 2015) from the technology-enabled platform. Further, the figure is expected to rise to 75% in the next cycle.
The company makes strategic acquisitions to grow its overall business. It strengthened the technology platform through buyouts like APT, PayPros, Heartland, etc. Also, acquisitions of Total System Services, Zego, Mineral Tree and others are improving its presence in multiple fields across various markets. The Zego acquisition alone exposed the company to a market worth $1 trillion.
Also, GPN focuses on top-tier strategic partnerships to grow its business and future-proof underlying technologies. It created a multi-year strategic partnership with Google, which is expected to meaningfully enhance the company’s ability to deliver new, innovative cloud-based products and capabilities, advance its technology-enabled distribution strategy, and deliver significant operational efficiencies. All this will be achieved while improving speed-to-market and the scalability of the Merchant Solutions business. The company also entered into an agreement with Amazon Web Services to provide a cloud-based issuer processing platform to financial institutions around the world.
Operating cash flows have been increasing over the years. It anticipates generating $15 billion of adjusted free cash flow in a cumulative manner for the 2021-2025 period. It remains on track to achieve its aim of converting around 100% of adjusted earnings to adjusted free cash flow.
Key Concerns
There are a few factors that are impeding the growth of the stock lately.
Increasing costs are eating into its profits. Despite implementing multiple cost-control measures, the company's operating expenses are on the rise. In the past nine months of 2021, its operating costs rose 9.1% year over year to $5,291.9 billion. This can dent the company's profit levels. Also, rising competition in the payment market is concerning. Emerging payment companies with significant growth potential are capturing markets at a faster rate. Also, Merchant revenues for the fourth quarter might decline due to seasonality. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Better-Ranked Players
Some better-ranked stocks in the business services space include Triterras, Inc. , Marathon Digital Holdings, Inc. (MARA - Free Report) and Usio, Inc. (USIO - Free Report) , each carrying a Zacks Rank #2.
Headquartered in Singapore, Triterras is a fast-growing fintech company. Its trade and trade finance solutions are expected to witness an increase in demand as economies keep recovering at a fast pace. Its strategic moves like collaborating with essDOCS, a paperless global trade management firm, will likely accelerate digital trade documents usage for Triterras’ clients. TRIT’s earnings estimates have risen 16.1% in the past 60 days. The Zacks Consensus Estimate for earnings per share for the current year is pegged at 65 cents.
Based in Las Vegas, NV, Marathon Digital is a digital asset technology firm. It is one of the largest enterprise Bitcoin mining firms in North America. It has successfully upgraded the systems of the power plant in Hardin, MT, boosting Bitcoin producing capacity and efficiency. Since Oct 21, 2021, MARA has been accumulating all Bitcoins generated.
Marathon Digital’s bottom line for 2021 is expected to grow 283.3% year over year to 22 cents per share. In the last reported quarter, MARA came up with earnings of 85 cents per share, delivering a surprise of 77%.
San Antonio, TX-based Usio is an electronic payment processing service provider in the United States. Its ability to win government contracts bodes well for the company. Last October, Usio won a prepaid card issuing platform contract from the Houston Health Department. Its partnership with BoosterHub will increase the usage of USIO’s PayFac-in-a-Box payment solutions.
Usio’s bottom line for 2021 is expected to surge 87% year over year. It has witnessed one upward estimate revision in the past 30 days and no movement in the opposite direction. Usio beat earnings estimates thrice in the last four quarters and met once, with the average surprise being 81.3%.
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Why You Should Retain Global Payments (GPN) Stock for Now
Global Payments Inc. (GPN - Free Report) is well poised to grow on the back of strategic acquisitions and partnerships. Its massive cash flow generating ability bodes well. Also, the rising demand for digital payment solutions is a huge positive.
Global Payments — with a market cap of $34.9 billion — is a payment solutions provider based in Atlanta, GA. It provides innovative software and services all around the globe. The payments technology company has a massive network including North America, Latin America, Europe and the Asia Pacific.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Trend in Estimates
The Zacks Consensus Estimate for Global Payments’ 2021 earnings is pegged at $8.17 per share, indicating a 27.7% year-over-year rise. The company beat earnings estimates in each of the last four quarters, with the average being 3.6%.
Global Payments Inc. Price and EPS Surprise
Global Payments Inc. price-eps-surprise | Global Payments Inc. Quote
Furthermore, the consensus mark for earnings is $9.62 per share for 2022, indicating a 17.8% year-over-year rise.
VGM Score
GPN currently has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Growth Drivers
The coronavirus pandemic has triggered a massive increase in digital payments over the last few quarters. The momentum is not expected to subside anytime soon. Also, increased security and easy availability will keep demand for digital payment solutions high, which will continue supporting Global Payments’ revenue growth. GPN projects adjusted net revenues within $7.71-$7.73 billion for this year compared with the previous guided range of $7.70-$7.73 billion, indicating 14-15% growth from the 2020 reported figure.
Ongoing investments in technology have led to a shift in Global Payments’ business mix toward technology enablement, which represented 60% of the company’s 2020 revenues (up from 30% in 2015) from the technology-enabled platform. Further, the figure is expected to rise to 75% in the next cycle.
The company makes strategic acquisitions to grow its overall business. It strengthened the technology platform through buyouts like APT, PayPros, Heartland, etc. Also, acquisitions of Total System Services, Zego, Mineral Tree and others are improving its presence in multiple fields across various markets. The Zego acquisition alone exposed the company to a market worth $1 trillion.
Also, GPN focuses on top-tier strategic partnerships to grow its business and future-proof underlying technologies. It created a multi-year strategic partnership with Google, which is expected to meaningfully enhance the company’s ability to deliver new, innovative cloud-based products and capabilities, advance its technology-enabled distribution strategy, and deliver significant operational efficiencies. All this will be achieved while improving speed-to-market and the scalability of the Merchant Solutions business. The company also entered into an agreement with Amazon Web Services to provide a cloud-based issuer processing platform to financial institutions around the world.
Operating cash flows have been increasing over the years. It anticipates generating $15 billion of adjusted free cash flow in a cumulative manner for the 2021-2025 period. It remains on track to achieve its aim of converting around 100% of adjusted earnings to adjusted free cash flow.
Key Concerns
There are a few factors that are impeding the growth of the stock lately.
Increasing costs are eating into its profits. Despite implementing multiple cost-control measures, the company's operating expenses are on the rise. In the past nine months of 2021, its operating costs rose 9.1% year over year to $5,291.9 billion. This can dent the company's profit levels. Also, rising competition in the payment market is concerning. Emerging payment companies with significant growth potential are capturing markets at a faster rate. Also, Merchant revenues for the fourth quarter might decline due to seasonality. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Better-Ranked Players
Some better-ranked stocks in the business services space include Triterras, Inc. , Marathon Digital Holdings, Inc. (MARA - Free Report) and Usio, Inc. (USIO - Free Report) , each carrying a Zacks Rank #2.
Headquartered in Singapore, Triterras is a fast-growing fintech company. Its trade and trade finance solutions are expected to witness an increase in demand as economies keep recovering at a fast pace. Its strategic moves like collaborating with essDOCS, a paperless global trade management firm, will likely accelerate digital trade documents usage for Triterras’ clients. TRIT’s earnings estimates have risen 16.1% in the past 60 days. The Zacks Consensus Estimate for earnings per share for the current year is pegged at 65 cents.
Based in Las Vegas, NV, Marathon Digital is a digital asset technology firm. It is one of the largest enterprise Bitcoin mining firms in North America. It has successfully upgraded the systems of the power plant in Hardin, MT, boosting Bitcoin producing capacity and efficiency. Since Oct 21, 2021, MARA has been accumulating all Bitcoins generated.
Marathon Digital’s bottom line for 2021 is expected to grow 283.3% year over year to 22 cents per share. In the last reported quarter, MARA came up with earnings of 85 cents per share, delivering a surprise of 77%.
San Antonio, TX-based Usio is an electronic payment processing service provider in the United States. Its ability to win government contracts bodes well for the company. Last October, Usio won a prepaid card issuing platform contract from the Houston Health Department. Its partnership with BoosterHub will increase the usage of USIO’s PayFac-in-a-Box payment solutions.
Usio’s bottom line for 2021 is expected to surge 87% year over year. It has witnessed one upward estimate revision in the past 30 days and no movement in the opposite direction. Usio beat earnings estimates thrice in the last four quarters and met once, with the average surprise being 81.3%.