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Here's Why You Should Hold Global Payments (GPN) in Your Portfolio

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Global Payments Inc. (GPN - Free Report) is well-poised for growth given its enhanced payment solutions and cost-curbing efforts. The increased adoption of digital payments has also been favoring the company.

The leading payments technology company boasts of an impressive earnings surprise history. It surpassed earnings estimates in each of the trailing four quarters, the average surprise of 6.10%.

The expected long-term earnings growth rate is 18.3%, better than the industry’s average expectation of 12.9%.

Factors Driving the Stock

This Zacks Rank #3 (Hold) company has been rolling out innovative technology-based solutions, backed by its advanced technologies and operational advantages. Through the enhanced solutions, Global Payments has been striving to ease the payment process for its worldwide clients and penetrate into newer areas.

The massive shift of the payments industry from cash to digital form of payments has been benefiting the company significantly as Global Payments has been emphasizing on shift to electronic and digital payments by leveraging its distribution channels and enhanced solutions. Adherence to stringent social-distancing measures due to the pandemic has resulted in a surge in adoption of digital means.

In a bid to serve its clients better, the company has been making substantial investments in employing cutting edge technologies.

To consolidate global footprint, the company has been actively undertaking acquisitions, alliances and joint ventures with leading financial institutions and tech-based payment service providers, which in turn, has been improving the scale of offerings.

Moreover, the company has undertaken a number of cost-cutting efforts to help it somewhat tide over the numerous operational challenges triggered by the pandemic. As part of the company’s strategic initiatives undertaken, the merger of Global Payments with TSYS completed last year has paved the way for the company to expect annual run-rate expense synergies of a minimum of $375 million stemming from the merger within three years.

Furthermore, Global Payments boasts of a robust balance sheet, with increasing cash balance and declining debt levels. The company has solid cash generating abilities, which enables it to not only make business investments but also undertake prudent capital deployment measures through share buybacks and dividend payments. Notably, the company has enhanced its share buyback program to $1.25 billion in this October.

Shares of the company have gained 23.4% in the past six months compared with the industry’s rally of 9.8%. The Zacks Consensus Estimate for 2020 earnings per share is pegged at $6.40, indicating an improvement of 2.9% from the 2019 reported figure.

Price Performance of its Peers

The price performance of Global Payments looks impressive when compared to its peers, namely EVO Payments, Inc. , Envestnet, Inc. (ENV - Free Report) and Equifax Inc. (EFX - Free Report) . While Envestnet has gained 19% in the past six months, EVO Payments and Equifax have gained 16.1% and 15.6%, respectively, in the same time frame.

All the three stocks carry the same Zacks Rank as of Global Payments. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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