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Global Payments (GPN): Story of an Undervalued Cashflow Beast
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Global Payments Inc. (GPN - Free Report) has a robust cash flow generating ability in place, which is aiding its expansion efforts. Also, the stock is undervalued at its current price level, as you will see below. Its strong fundamentals make it perfect for retaining in your portfolio.
Let’s delve deeper.
Consistent Growth
Global Payments’ operating revenues are rising at an impressive rate. Its top line jumped almost 15% year over year in 2021 to $7.7 billion. Further, the company expects the metric to rise to $8.42-$8.50 billion for 2022. The Zacks Consensus Estimate for 2023 revenues is currently pegged at $9.2 billion. Adjusted earnings per share (EPS) in 2021 jumped 28% year over year to $8.16. The Zacks Rank #3 (Hold) company projects the bottom line to rise to $9.45-$9.67 per share in 2022. The consensus mark indicates the metric to further increase to $11.16 per share in 2023.
The company beat earnings estimates in each of the past four quarters, with an average surprise of 3.4%.
Its growth prospects are significantly fuelled by inorganic strategies. Accretive acquisitions like PayPros, Total System Services, Zego, Mineral Tree and others are improving its presence in multiple fields across various markets, expanding its product offerings. Global Payments has taken over the business of Germany-based payment platform, Payone, in Austria. Its strategic partnership with Erste Bank und Sparkassen for offering payment terminals and other innovative payment solutions to merchants is praiseworthy. It will also serve as the technology partner for the European card issuing business of Spain’s largest domestic bank, CaixaBank.
Free Cash Flow Strength
The company’s acquisition ambitions are supported by its massive cash-generating ability. It reinvests free cash flows profitably for expanding its portfolio. In the trailing 12-month period, the company’s free cash flow jumped 21.8% to $2,288 million. Its prudent capital deployment efforts are lucrative for shareholders as its dividend yield compares favorably with the industry average. In 2021, Global Payments bought back roughly 5% of its outstanding shares. Management approved an increase in its share repurchase program, bringing the total available authorization to $2 billion.
Balance Sheet
The company’s financial position seems pretty strong, with $2 billion of cash and cash equivalents at December end and no significant debt maturities until 2023. The current portion of long-term debt was only $78.5 million at the fourth-quarter end, way below its cash level.
Valuation
Global Payments’ stocks are undervalued as it is currently trading at forward 12-month earnings of 12.9X, lower than the industry’s 21.3X. This indicates that the stock is cheaper than its peers and has more room left to run.
Accenture has been steadily gaining traction in its outsourcing and consulting businesses. Based in Dublin, Ireland, Accenture’s bottom line for 2022 is expected to jump 19.8% year over year.
ACN's earnings beat estimates in each of the last four quarters, with an average of 5.3%.
Vontier, based in Raleigh, NC, delivers technical equipment to clients all around the globe. VNT’s bottom line for 2022 is likely to rise by 8% year over year.
Vontier’s earnings beat estimates in each of the last four quarters, with an average surprise of 10%.
CleanSpark, headquartered in Henderson, NV, has a digital currency mining business and provides energy technology solutions. The consensus mark for CLSK’s 2022 earning sis pegged at $1.33 per share, indicating a significant improvement from a loss of 41 cents a year ago.
CleanSpar’s earnings beat earnings estimates thrice in the last four quarters and missed the same once.
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Global Payments (GPN): Story of an Undervalued Cashflow Beast
Global Payments Inc. (GPN - Free Report) has a robust cash flow generating ability in place, which is aiding its expansion efforts. Also, the stock is undervalued at its current price level, as you will see below. Its strong fundamentals make it perfect for retaining in your portfolio.
Let’s delve deeper.
Consistent Growth
Global Payments’ operating revenues are rising at an impressive rate. Its top line jumped almost 15% year over year in 2021 to $7.7 billion. Further, the company expects the metric to rise to $8.42-$8.50 billion for 2022. The Zacks Consensus Estimate for 2023 revenues is currently pegged at $9.2 billion. Adjusted earnings per share (EPS) in 2021 jumped 28% year over year to $8.16. The Zacks Rank #3 (Hold) company projects the bottom line to rise to $9.45-$9.67 per share in 2022. The consensus mark indicates the metric to further increase to $11.16 per share in 2023.
The company beat earnings estimates in each of the past four quarters, with an average surprise of 3.4%.
Global Payments Inc. Price and EPS Surprise
Global Payments Inc. price-eps-surprise | Global Payments Inc. Quote
Inorganic Growth
Its growth prospects are significantly fuelled by inorganic strategies. Accretive acquisitions like PayPros, Total System Services, Zego, Mineral Tree and others are improving its presence in multiple fields across various markets, expanding its product offerings. Global Payments has taken over the business of Germany-based payment platform, Payone, in Austria. Its strategic partnership with Erste Bank und Sparkassen for offering payment terminals and other innovative payment solutions to merchants is praiseworthy. It will also serve as the technology partner for the European card issuing business of Spain’s largest domestic bank, CaixaBank.
Free Cash Flow Strength
The company’s acquisition ambitions are supported by its massive cash-generating ability. It reinvests free cash flows profitably for expanding its portfolio. In the trailing 12-month period, the company’s free cash flow jumped 21.8% to $2,288 million. Its prudent capital deployment efforts are lucrative for shareholders as its dividend yield compares favorably with the industry average. In 2021, Global Payments bought back roughly 5% of its outstanding shares. Management approved an increase in its share repurchase program, bringing the total available authorization to $2 billion.
Balance Sheet
The company’s financial position seems pretty strong, with $2 billion of cash and cash equivalents at December end and no significant debt maturities until 2023. The current portion of long-term debt was only $78.5 million at the fourth-quarter end, way below its cash level.
Valuation
Global Payments’ stocks are undervalued as it is currently trading at forward 12-month earnings of 12.9X, lower than the industry’s 21.3X. This indicates that the stock is cheaper than its peers and has more room left to run.
Key Picks
Some better-ranked stocks in the Business Services space include Accenture plc (ACN - Free Report) , Vontier Corporation (VNT - Free Report) and CleanSpark, Inc. (CLSK - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Accenture has been steadily gaining traction in its outsourcing and consulting businesses. Based in Dublin, Ireland, Accenture’s bottom line for 2022 is expected to jump 19.8% year over year.
ACN's earnings beat estimates in each of the last four quarters, with an average of 5.3%.
Vontier, based in Raleigh, NC, delivers technical equipment to clients all around the globe. VNT’s bottom line for 2022 is likely to rise by 8% year over year.
Vontier’s earnings beat estimates in each of the last four quarters, with an average surprise of 10%.
CleanSpark, headquartered in Henderson, NV, has a digital currency mining business and provides energy technology solutions. The consensus mark for CLSK’s 2022 earning sis pegged at $1.33 per share, indicating a significant improvement from a loss of 41 cents a year ago.
CleanSpar’s earnings beat earnings estimates thrice in the last four quarters and missed the same once.