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Why Is Global Payments (GPN) Up 3.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Global Payments (GPN - Free Report) . Shares have added about 3.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Global Payments due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Global Payments Q2 Earnings Beat Estimates'

Global Payments’ earnings of $1.31 per share beat the Zacks Consensus Estimate by 14.91%. However, the bottom line was down 13% year over year.

Adjusted net revenues declined 14% year over year to $1.521 billion but the top line surpassed the Zacks Consensus Estimate of $1.41 billion.
Adjusted operating margin was 37%, down 40 basis points year over year.

Segmental Strength

Merchant Solutions: Adjusted revenues of $905.7 million decreased 21.3% year over year. Operating income of $371.5 million fell 28.8% year over year.

Issuer Solutions: Adjusted net revenues plus network fees of $414 million dipped 5.4% year over year. Operating income of $177.1 million increased 11.3% year over year.

Business and Consumer Solution: This segment was formed after the acquisition of Total System. It reported adjusted net revenues plus network fees of $216.7 million, up 10.5% year over year. Operating income was $70.1 million, up 45.4% year over year.

Balance Sheet Position (as of Jun 30, 2020)

Total cash and cash equivalents were $1.83 billion, up 8.8% from the level as of Dec 31, 2019.

Long-term debt was $8.4 billion, down 7.2% from the level at 2019 end.
Net cash provided by operating activities for the first six months was $960.3 million, up 288% year over year.

Dividend Announcement

The company approved a dividend of 19.5 cents per share, payable Sep 24, 2020 to its shareholders of record as of Sep 10.


 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 6.82% due to these changes.

VGM Scores

At this time, Global Payments has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Global Payments has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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