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Why Is Global Payments (GPN) Down 1.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Global Payments (GPN - Free Report) . Shares have lost about 1.4% in that time frame, outperforming the S&P 500.

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

Global Payments' Q2 Earnings Meet, Ups '22 EPS View

Global Payments reported second-quarter 2022 adjusted earnings per share (EPS) of $2.36, which met the Zacks Consensus Estimate. The bottom line improved 15.7% year over year.

Adjusted net revenues of GPN amounted to $2.1 billion, which grew 6.1% year over year in the second quarter. The top line missed the consensus mark by 1.9%.

The quarterly results of the leading payments technology company were driven by strong performances across its Merchant Solutions and Issuer Solutions segments. Global Payments achieved strong year-over-year revenues and EPS growth in the second quarter despite headwinds related to the exit of its Russian business and adverse foreign currency fluctuations. However, an elevated operating expense level partly offsets the upside.

Operating Performance

Adjusted operating margin improved 200 basis points (bps) year over year to 43.8% during the quarter under review.

Total operating expenses of $2.8 billion escalated 58.4% year over year in the second quarter.

Adjusted operating income climbed 11.4% year over year to $902.4 million.

Segmental Performances

Merchant Solutions: The segment reported adjusted revenues of $1.4 billion in the second quarter, which grew 11.3% year over year. Adjusted operating income of $719.8 million improved 15.2% year over year on 15% global constant currency volume growth.

Issuer Solutions: Adjusted revenues of the segment amounted to $459.1 million, up 2.8% year over year. Commercial card volume growth of 35% contributed to the sound quarterly performance of the segment. Adjusted operating income of nearly $200 million increased 2% year over year in the quarter under review.

Business and Consumer Solutions: The segment’s adjusted revenues of $187.6 million plunged 17.5% year over year during the second quarter. Adjusted operating income declined 19.8% year over year to $49.1 million.

Financial Position (as of Jun 30, 2022)

Global Payments exited the second quarter with cash and cash equivalents of nearly $2 billion, which decreased 2.3% from the 2021-end level.

Total assets of $44.2 billion fell 2.4% from the level at the 2021 end.

Long-term debt amounted to $10.9 billion, down 4.7% from the figure as of Dec 31, 2021. The current portion of long-term debt was $1.3 billion at the second-quarter-end.

Shareholders’ equity of $23.8 billion slipped 7.3% from the 2021-end figure.

During the six months ended Jun 30, 2022, net cash provided by operating activities of GPN improved 8% from the prior-year comparable period to $1.2 billion.

Capital Deployment

Global Payments bought back shares worth $600.3 million during the second quarter. An increase to the capacity of the company’s share buyback program was made to bring the total authorization amount to $1.5 billion.

Management approved a quarterly dividend of 25 cents per share, which will be paid out on Sep 30, 2022, to its shareholders of record as of Sep 16.

Business Update

Global Payments inked a definite deal to purchase the leading payment technology and services provider EVO Payments for $4 billion. The transaction is anticipated to be completed in the first quarter of 2023 and considerably boost GPN’s target addressable markets as well as its leadership in integrated payments globally. The acquisition is likely to bolster the business-to-business (B2B) software and payment solutions of Global Payments. The global leader in technology investing, Silver Lake, has pledged a long-term strategic investment of $1.5 billion in Global Payments through convertible senior notes.

2022 Guidance Updated

Management presently anticipates adjusted net revenue, on a constant currency basis, between $8.48 billion and $8.55 billion, up from the prior outlook of $8.42-$8.50 billion. The mid-point of the revised guidance implies 10-11% growth from the 2021 reported figure.

Global Payments continues to forecast low double-digit growth, on a constant currency basis, in Merchant Solutions revenues for 2022. Meanwhile, revenues of the Issuer Solutions segment are expected to witness mid-to-high-single digits growth from the 2021 reported figure on a constant currency basis, while the earlier outlook anticipated the metric to see mid-single-digit growth.

Constant currency adjusted EPS is projected to be $9.53-$9.75, higher than the previous projection range of $9.45-$9.67. The mid-point of the updated outlook suggests growth of 17-20% from the 2021 reported figure. GPN expects to convert almost 100% of adjusted net income into adjusted free cash flow.

Global Payments expects the 2022 adjusted operating margin to increase up to 150 bps this year from the 2021 level, while the earlier estimate predicted the metric to expand up to 125 bps year over year.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Global Payments has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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


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

Performance of an Industry Player

Global Payments is part of the Zacks Financial Transaction Services industry. Over the past month, Bread Financial Holdings (BFH - Free Report) , a stock from the same industry, has gained 1%. The company reported its results for the quarter ended June 2022 more than a month ago.

Bread Financial reported revenues of $893 million in the last reported quarter, representing a year-over-year change of -11.8%. EPS of $0.25 for the same period compares with $5.99 a year ago.

Bread Financial is expected to post earnings of $3.02 per share for the current quarter, representing a year-over-year change of -32.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.9%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Bread Financial. Also, the stock has a VGM Score of D.

In-Depth Zacks Research for the Tickers Above

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