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Global Payments (GPN) to Post Q1 Earnings: Can it Beat Estimates?
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Global Payments Inc. (GPN - Free Report) is set to report first-quarter 2022 results on May 2, before the opening bell.
Thanks to robust Merchant Solutions’ performance, the leading payment technology company reported fourth-quarter adjusted earnings per share of $2.13, beating the Zacks Consensus Estimate of $2.11. The ongoing economic recovery aided GPN with a higher number of transactions.
The Zacks Consensus Estimate for first-quarter earnings per share of $2.04 suggests a 12.1% increase from the prior-year figure of $1.82. It witnessed no upward revision in the past week versus none in the opposite direction. The consensus estimate for first-quarter revenues of $2 billion indicates an 11.9% increase from the year-ago reported figure.
Global Payments beat the consensus estimate for earnings in each of the prior four quarters, with the average being 3.4%. This is depicted in the graph below:
In the first quarter, profits from Global Payments’ Merchant Solutions — its biggest operating segment — are likely to have increased from higher spending. Economic recovery due to factors like the relaxation of COVID-related restrictions and others is likely to have bumped up card and payment activities among thousands of the company's small merchant clients.
The Zacks Consensus Estimate for operating income from Merchant Solutions is pegged at $618 million, indicating a rise from $532 million in the year-ago period, positioning GPN for year-over-year growth. Also, the consensus mark for Issuer Solutions operating income is pegged at $201 million, signaling an increase from $190 million in first-quarter 2021.
Nevertheless, the Zacks Consensus Estimate for operating income from the Business and Consumer Solutions segment is pegged at $57 million, indicating a decline from $81 million a year ago.
Also, profits from the business are likely to have been partially offset by weakness in the commercial card business and corporate travel. While the majority of travel bans have been lifted, corporate travel is yet to return to full strength. Further, increasing operating costs are expected to have reduced margins in the first quarter, making an earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Global Payments this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here as you will see below.
Earnings ESP: The company’s Earnings ESP is -0.08%. This is because the Most Accurate Estimate is currently pegged lower than the Zacks Consensus Estimate of $2.04 per share.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Global Payments currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Global Payments, here are some companies from the Business Services space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
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Global Payments (GPN) to Post Q1 Earnings: Can it Beat Estimates?
Global Payments Inc. (GPN - Free Report) is set to report first-quarter 2022 results on May 2, before the opening bell.
Thanks to robust Merchant Solutions’ performance, the leading payment technology company reported fourth-quarter adjusted earnings per share of $2.13, beating the Zacks Consensus Estimate of $2.11. The ongoing economic recovery aided GPN with a higher number of transactions.
Let’s see how things have shaped up prior to the first-quarter earnings announcement.
Trend in Estimate Revision
The Zacks Consensus Estimate for first-quarter earnings per share of $2.04 suggests a 12.1% increase from the prior-year figure of $1.82. It witnessed no upward revision in the past week versus none in the opposite direction. The consensus estimate for first-quarter revenues of $2 billion indicates an 11.9% increase from the year-ago reported figure.
Global Payments beat the consensus estimate for earnings in each of the prior four quarters, with the average being 3.4%. This is depicted in the graph below:
Global Payments Inc. Price and EPS Surprise
Global Payments Inc. price-eps-surprise | Global Payments Inc. Quote
Factors to Note
In the first quarter, profits from Global Payments’ Merchant Solutions — its biggest operating segment — are likely to have increased from higher spending. Economic recovery due to factors like the relaxation of COVID-related restrictions and others is likely to have bumped up card and payment activities among thousands of the company's small merchant clients.
The Zacks Consensus Estimate for operating income from Merchant Solutions is pegged at $618 million, indicating a rise from $532 million in the year-ago period, positioning GPN for year-over-year growth. Also, the consensus mark for Issuer Solutions operating income is pegged at $201 million, signaling an increase from $190 million in first-quarter 2021.
Nevertheless, the Zacks Consensus Estimate for operating income from the Business and Consumer Solutions segment is pegged at $57 million, indicating a decline from $81 million a year ago.
Also, profits from the business are likely to have been partially offset by weakness in the commercial card business and corporate travel. While the majority of travel bans have been lifted, corporate travel is yet to return to full strength. Further, increasing operating costs are expected to have reduced margins in the first quarter, making an earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Global Payments this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here as you will see below.
Earnings ESP: The company’s Earnings ESP is -0.08%. This is because the Most Accurate Estimate is currently pegged lower than the Zacks Consensus Estimate of $2.04 per share.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Global Payments currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Global Payments, here are some companies from the Business Services space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
ABM Industries Incorporated (ABM - Free Report) has an Earnings ESP of +1.80% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
ABM Industries’ bottom line for the to-be-reported quarter is expected to rise 2.4% year over year.
WEX Inc. (WEX - Free Report) has an Earnings ESP of +0.78% and is a Zacks #3 Ranked player.
WEX’s earnings per share for the to-be-reported quarter are expected to jump 51.4% year over year.
PagSeguro Digital Ltd. (PAGS - Free Report) has an Earnings ESP of +0.33% and a Zacks Rank #3.
PagSeguro Digital’s bottom line for the to-be-reported quarter is expected to grow 16.7% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.