We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Global Payments Rallies 14.6% in 3 Months: Get It or Let It Go?
Read MoreHide Full Article
Shares of Global Payments Inc. (GPN - Free Report) have gained 14.6% in the past three months, outperforming the industry’s 5.8% growth. The Business Services sector and the S&P 500 Composite index have increased 3.1% and 0.3%, respectively, in the same time frame.
Improving transaction volumes and growth in subscription and software revenues are benefiting this leading payment technology and software solutions provider. GPN shares are also trading well above the 50-day moving average, indicating a bullish trend. Global Payments carries a Zacks Rank #3 (Hold) at present.
GPN Stock Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Is this the right time to buy GPN shares for potential upside? Let's go through the stock’s growth drivers.
GPN’s Growth Drivers
The Merchant Solutions unit will likely benefit from rising demand in embedded payments and commerce enablement solutions. Additionally, growth in volume, U.S. merchant partners, and point-of-sale business will also buoy its results.
GPN’s next-generation point-of-sale solutions are expected to launch in major international markets over the next 12 to 15 months, including Ireland, Poland, Australia etc. This will boost point-of-sale revenue contribution in the coming months. We expect revenues from the Merchant Solutions unit to increase more than 7% year over year this year. Adjusted operating margins of this business are expected to improve in the second half of 2024, thanks to the ramping up of EVO synergy realization.
Meanwhile, the Issuer Solutions segment is expected to gain from higher transactions and core issuer growth. Successfully cross-selling its value-added services like virtual card solutions and fraud prevention will further benefit the top line in the future. Renewal of existing partnerships, forging new ones and expanding its offerings to mid-market and smaller banks, as well as new geographies, bode well. Our model estimate indicates Issuer Solutions revenues to increase 6.4% year over year. Issuer Solutions’ operating margins are also expected to improve owing to better efficiency.
Looking at its geographical breakdown, it generated only 4.3% year-over-year growth in the Americas last year and 5.4% in the Asia Pacific region. Europe business, on the other hand, witnessed a 28.6% increase and is expected to continue the momentum. Even in the second quarter of 2024, the business has mid-single-digit growth. We expect Europe business to increase 11.6% year over year in 2024. The Americas business will continue to bring stability and innovation to its growth path.
The large numbers of unbanked individuals and small businesses across the Asia Pacific region present a significant opportunity for GPN to expand its network. Effectively tapping into this market could serve as a sustainable growth catalyst for the company.
GPN’s Favorable Valuation
Despite the recent growth in stock price, GPN is trading at a discount compared to the industry average. The stock is currently trading at 8.62X forward 12-month price to earnings, which compares to 22.78X for the industry, indicating undervaluation. Even better, it is trading 73% below its five-year high of 31.86. The company has a Value Score of B. Hence, it remains an attractive option to retain in an investment portfolio.
Image Source: Zacks Investment Research
What’s Weighing on GPN Stock?
Rising expenses are putting pressure on the company’s margins. Despite cost-control measures, total adjusted operating expenses rose 4.8% year over year in the first half of 2024. However, the company expects to realize $135 million in run rate expense synergies from the EVO transaction within the next two years, providing some respite.
Competitive pressures from new digital entrants venturing into the bank issuer business may prove to be harmful to GPN in the future.
Estimate Revisions for GPN Stock
The Zacks Consensus Estimate for GPN’s 2024 earnings per share (EPS) is pegged at $11.63, which indicates an 11.6% increase from the 2023 figure. However, 2024 EPS estimates for GPN have been revised downward over the past 60 days, reflecting negative analyst sentiment.
Image Source: Zacks Investment Research
GPN Stock Holds Promise
Strong demand for Global Payments solutions coupled with improving transaction volumes and expanding partnerships make it an attractive stock to retain for current investors. However, potential investors might want to keep an eye on its competitive position and rising expenses and wait for a better entry point.
The bottom line of Trane Technologies outpaced estimates in each of the last four quarters, the average surprise being 8.1%. The Zacks Consensus Estimate for TT’s 2024 earnings indicates an improvement of 19.8% from the year-ago reported figure. The consensus mark for revenues implies growth of 10.6% from the year-ago reported number. The consensus mark for TT’s earnings has moved 3.1% north in the past 60 days.
The bottom line of RCM Technologies outpaced estimates in three of the last four quarters and matched the mark once, the average surprise being 17.5%. The Zacks Consensus Estimate for RCMT’s 2024 earnings indicates an improvement of 10.4% from the year-ago reported figure. The consensus mark for revenues implies growth of 5.3% from the year-ago reported number. The consensus mark for RCMT’s earnings has moved 2.2% north in the past 30 days.
The bottom line of OppFi outpaced estimates in each of the last four quarters, the average surprise being 128.4%. The Zacks Consensus Estimate for OPFI’s 2024 earnings indicates an improvement of 45.1% from the year-ago reported figure. The consensus mark for revenues implies growth of 1.2% from the year-ago reported number. The consensus mark for OPFI’s earnings has moved 23.3% north in the past 60 days.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Global Payments Rallies 14.6% in 3 Months: Get It or Let It Go?
Shares of Global Payments Inc. (GPN - Free Report) have gained 14.6% in the past three months, outperforming the industry’s 5.8% growth. The Business Services sector and the S&P 500 Composite index have increased 3.1% and 0.3%, respectively, in the same time frame.
Improving transaction volumes and growth in subscription and software revenues are benefiting this leading payment technology and software solutions provider. GPN shares are also trading well above the 50-day moving average, indicating a bullish trend. Global Payments carries a Zacks Rank #3 (Hold) at present.
GPN Stock Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Is this the right time to buy GPN shares for potential upside? Let's go through the stock’s growth drivers.
GPN’s Growth Drivers
The Merchant Solutions unit will likely benefit from rising demand in embedded payments and commerce enablement solutions. Additionally, growth in volume, U.S. merchant partners, and point-of-sale business will also buoy its results.
GPN’s next-generation point-of-sale solutions are expected to launch in major international markets over the next 12 to 15 months, including Ireland, Poland, Australia etc. This will boost point-of-sale revenue contribution in the coming months. We expect revenues from the Merchant Solutions unit to increase more than 7% year over year this year. Adjusted operating margins of this business are expected to improve in the second half of 2024, thanks to the ramping up of EVO synergy realization.
Meanwhile, the Issuer Solutions segment is expected to gain from higher transactions and core issuer growth. Successfully cross-selling its value-added services like virtual card solutions and fraud prevention will further benefit the top line in the future. Renewal of existing partnerships, forging new ones and expanding its offerings to mid-market and smaller banks, as well as new geographies, bode well. Our model estimate indicates Issuer Solutions revenues to increase 6.4% year over year. Issuer Solutions’ operating margins are also expected to improve owing to better efficiency.
Looking at its geographical breakdown, it generated only 4.3% year-over-year growth in the Americas last year and 5.4% in the Asia Pacific region. Europe business, on the other hand, witnessed a 28.6% increase and is expected to continue the momentum. Even in the second quarter of 2024, the business has mid-single-digit growth. We expect Europe business to increase 11.6% year over year in 2024. The Americas business will continue to bring stability and innovation to its growth path.
The large numbers of unbanked individuals and small businesses across the Asia Pacific region present a significant opportunity for GPN to expand its network. Effectively tapping into this market could serve as a sustainable growth catalyst for the company.
GPN’s Favorable Valuation
Despite the recent growth in stock price, GPN is trading at a discount compared to the industry average. The stock is currently trading at 8.62X forward 12-month price to earnings, which compares to 22.78X for the industry, indicating undervaluation. Even better, it is trading 73% below its five-year high of 31.86. The company has a Value Score of B. Hence, it remains an attractive option to retain in an investment portfolio.
Image Source: Zacks Investment Research
What’s Weighing on GPN Stock?
Rising expenses are putting pressure on the company’s margins. Despite cost-control measures, total adjusted operating expenses rose 4.8% year over year in the first half of 2024. However, the company expects to realize $135 million in run rate expense synergies from the EVO transaction within the next two years, providing some respite.
Competitive pressures from new digital entrants venturing into the bank issuer business may prove to be harmful to GPN in the future.
Estimate Revisions for GPN Stock
The Zacks Consensus Estimate for GPN’s 2024 earnings per share (EPS) is pegged at $11.63, which indicates an 11.6% increase from the 2023 figure. However, 2024 EPS estimates for GPN have been revised downward over the past 60 days, reflecting negative analyst sentiment.
Image Source: Zacks Investment Research
GPN Stock Holds Promise
Strong demand for Global Payments solutions coupled with improving transaction volumes and expanding partnerships make it an attractive stock to retain for current investors. However, potential investors might want to keep an eye on its competitive position and rising expenses and wait for a better entry point.
Stocks to Consider
Some better-ranked stocks in the Business Services space are Trane Technologies plc (TT - Free Report) , RCM Technologies, Inc. (RCMT - Free Report) and OppFi Inc. (OPFI - Free Report) . Each of these companies presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The bottom line of Trane Technologies outpaced estimates in each of the last four quarters, the average surprise being 8.1%. The Zacks Consensus Estimate for TT’s 2024 earnings indicates an improvement of 19.8% from the year-ago reported figure. The consensus mark for revenues implies growth of 10.6% from the year-ago reported number. The consensus mark for TT’s earnings has moved 3.1% north in the past 60 days.
The bottom line of RCM Technologies outpaced estimates in three of the last four quarters and matched the mark once, the average surprise being 17.5%. The Zacks Consensus Estimate for RCMT’s 2024 earnings indicates an improvement of 10.4% from the year-ago reported figure. The consensus mark for revenues implies growth of 5.3% from the year-ago reported number. The consensus mark for RCMT’s earnings has moved 2.2% north in the past 30 days.
The bottom line of OppFi outpaced estimates in each of the last four quarters, the average surprise being 128.4%. The Zacks Consensus Estimate for OPFI’s 2024 earnings indicates an improvement of 45.1% from the year-ago reported figure. The consensus mark for revenues implies growth of 1.2% from the year-ago reported number. The consensus mark for OPFI’s earnings has moved 23.3% north in the past 60 days.