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Global Payments (GPN) Gears Up for Q4 Earnings: What to Expect

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Global Payments Inc. (GPN - Free Report) is set to report fourth-quarter 2021 results on Feb 10, before the opening bell.

Thanks to strong segmental contributions from Merchant Solutions, Issuer Solutions, and Business and Consumer Solutions, the leading payment technology company reported third-quarter adjusted earnings per share of $2.18, beating the Zacks Consensus Estimate of $2.14. Accelerated digitization across markets benefited the company, partly offset by elevated operating costs.

Let’s see how things have shaped up prior to the fourth-quarter earnings announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings per share of $2.11 suggests a 17.2% increase from the prior-year figure of $1.80. The consensus estimate for fourth-quarter revenues of $2 billion indicates a 12.4% 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 3.6%. This is depicted in the graph below:

Global Payments Inc. Price and EPS Surprise

Global Payments Inc. Price and EPS Surprise

Global Payments Inc. price-eps-surprise | Global Payments Inc. Quote

Factors to Note

Profits from Global Payments’ biggest operating segment, Merchant Solutions, are likely to have increased as a result of higher spending. Economic recovery due to the relaxation of COVID-related restrictions is likely to have bumped up card and payments activity among thousands of the company's small merchant clients.

The Zacks Consensus Estimate for operating income from Merchant Solutions is pegged at $628 million, indicating a rise from $528 million in the year-ago period, positioning the company for year-over-year growth.

The Zacks Consensus Estimate for operating income from the Business and Consumer Solutions segment is pegged at $55 million, indicating a rise from $49.43 million a year ago.

The consensus mark for Issuer Solutions operating income is pegged at $211 million, signaling an increase from $204 million in fourth-quarter 2020. Yet, 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 its full strength. Also, the increasing operating costs are expected to have reduced margins in the fourth 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 +0.12%. This is because the Most Accurate Estimate is currently pegged higher than the Zacks Consensus Estimate of $2.11 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 #4 (Sell).

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:

FactSet Research Systems Inc. (FDS - Free Report) has an Earnings ESP of +0.29% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

FactSet Research Systems’ bottom line for the to-be-reported quarter is expected to rise 8.8% year over year.

WEX Inc. (WEX - Free Report) has an Earnings ESP of +0.91% and is a Zacks #3 Ranked player. WEX’s earnings per share for the to-be-reported quarter is expected to jump 69.7% year over year.

S&P Global Inc. (SPGI - Free Report) has an Earnings ESP of +1.33% and a Zacks Rank #3. S&P Global’s bottom line for the to-be-reported quarter is expected to grow 15.5% year over year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.