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Global Payments (GPN) to Post Q4 Earnings: What's in the Cards?

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Global Payments Inc. (GPN - Free Report) is set to report its fourth-quarter 2022 results on Feb 10, before the opening bell.

In the last reported quarter, the leading payment technology company’s adjusted earnings of $2.48 per share missed the Zacks Consensus Estimate by 0.4% due to elevated operating costs resulting from higher selling, general and administrative expenses. However, the downside was partly offset by sound contributions from its Merchant and Issuer businesses.

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

The Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings per share of $2.45 suggests a 15% increase from the prior-year figure of $2.13. It witnessed no movement in the past week. Global Payments beat the consensus estimate for earnings in two of the prior four quarters, met once and missed on the other occasion, with the average surprise being 0.5%. 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

The consensus estimate for fourth-quarter revenues of $2 billion indicates a 2.1% increase from the year-ago reported figure.

Factors to Note

In the fourth quarter, profits from GPN’s Merchant Solutions — its biggest operating segment — are likely to have increased from higher customer spending. Higher travel and entertainment-related spendings are expected to have benefited the company’s performance.

The Zacks Consensus Estimate and our estimate for revenues from Merchant Solutions is pegged at $1,603 million, indicating an 8.7% increase from the year-ago period. The strong software businesses and continued execution of a technology-enabled strategy are likely to have driven the segment’s performance.

The consensus mark for Issuer Solutions’ adjusted revenues is pegged at $507 million, signaling 9.5% year-over-year growth from fourth-quarter 2021 while our estimate suggests a 15.6% increase. The addition of the leading accounts payable automation as well as business-to-business payments solutions provider MineralTree is likely to have aided the segment’s performance. These are expected to have positioned GPN for year-over-year growth.

However, the Zacks Consensus Estimate for revenues from the Consumer Solutions segment indicates a 22.5% year-over-year decrease while our estimate predicts a 14.5% decline. Higher levels of unemployment assistance benefits might have affected the segment.

Profits from the business are likely to have been partially offset by increased operating costs in the fourth quarter, making an earnings beat uncertain. Higher cost of service and selling, general and administrative expenses are likely to have affected the bottom line. We expect total operating expenses to have jumped 4.3% year over year. Continuous investments to upgrade digital capabilities are expected to have weighed on the margins.

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 -2.12%. This is because the Most Accurate Estimate is currently pegged at $2.40 per share, lower than the Zacks Consensus Estimate of $2.45.

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 broader 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:

GFL Environmental Inc. (GFL - Free Report) has an Earnings ESP of +15.00% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for GFL Environmental’s bottom line for the to-be-reported quarter indicates a 16.7% increase from the year-ago quarter’s reported figure. GFL’s earnings beat estimates in three of the last four quarters and met the mark once, the average surprise being 203.2%.

Black Knight, Inc. has an Earnings ESP of +1.36% and is a Zacks #3 Ranked player.

The Zacks Consensus Estimate for Black Knight’s bottom line for the to-be-reported quarter remained stable over the past week. BKI beat on earnings in three of the last four quarters and missed once.

Accenture plc (ACN - Free Report) has an Earnings ESP of +3.30% and a Zacks Rank #3.

The Zacks Consensus Estimate for Accenture’s bottom line for the to-be-reported quarter remained stable over the past week. ACN's earnings beat estimates in three of the last four quarters and missed the mark once, the average surprise being 3.2%.

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


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