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Here's Why You Should Retain Global Payments (GPN) Stock Now
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Global Payments Inc.’s (GPN - Free Report) growing payment volume, ambitious acquisitions, strong-performing Merchant Solutions business and streamlining of business make it worth retaining in one’s portfolio. Investors may also check this stock out for its favorable growth estimates.
Zacks Rank & Price Performance
GPN currently carries a Zacks Rank #3 (Hold). In the past month, the stock has gained 5.1% compared with the industry’s growth of 3.2%.
Image Source: Zacks Investment Research
Rising Estimates
The Zacks Consensus Estimate for Global Payments’ 2023 earnings is pegged at $10.37 per share, indicating an increase of 11.3% from the year-ago reported figure on 6.7% higher revenues of $8.6 billion.
The consensus estimate for 2024 earnings is pegged at $11.89, suggesting a 14.7% improvement from the prior-year reported figure on 6.8% higher revenues of $9.2 billion.
Business Tailwinds
Global Payments has been witnessing growth in revenues over the last few years on the back of improving cross-border and domestic corporate travel, and transaction volumes. Merchant Solutions contributed 69.1% to total revenues in 2022. This is expected to grow further as transaction fees will boost on the back of volume growth.
Adjusted net revenue growth in the Merchant Solutions segment is estimated to stay at the higher end of the 15-16% range in 2023. The segment is set to benefit from strength in technology-enabled businesses and the recovery of Asia-Pacific business.
The company expects to deliver 5-6% net revenue growth in the Issuer Solutions segment in 2023 owing to exceptional first-quarter performance and a solid conversion pipeline. MineralTree and Netspend B2B business will grow at low double digits which, in turn, will aid the segment. Global Payments has signed multi-year extensions with M&T Bank and has nine letters of intent which will fuel growth in the future.
GPN does not hesitate to boost its global footprint with ambitious acquisitions. It acquired EVO Payments, Inc. in August 2022, a leading payments and services provider, which offers a plethora of solutions to merchants in the United States and Europe. This acquisition expands GPN’s geographic presence, supplements its B2B business and most importantly supports its technology-based payments strategy.
Global Payments divested the consumer portion of its Netspend business, aiming to focus on its core corporate customers. It also entered into a definitive agreement to sell its gaming business. This highlights its unwavering focus on building up its core operations. These moves should lead to lower expenses and improve the bottom line in the future.
GPN focuses on top-tier strategic partnerships to grow its business. It has partnered with AWS to deploy cloud-based analytics and data platform for financial institutions. It has also inked a deal with Mondu to serve financial services customers across use cases, like prepaid cards, lending solutions and credit cards. Further, it has collaborated with leading parks and entertainment companies to provide beverage and Xenial food solutions.
The company’s financial flexibility enables it to invest in technology, strategic partnerships and return capital to shareholders. GPN exited first-quarter 2023 with cash and cash equivalents of $2,001.7 million, way above the current portion of long-term debt of $1,185.3 million. It bought back shares worth $200 million in the first quarter of 2023.
An increase in capacity of the company’s share buyback program was made to bring the total authorization amount to $1,295.7 million. Hence, a strong financial position remains an additional tailwind for Global Payments. This should instill confidence in shareholders.
Key Concerns
However, a few factors have been impeding the stock’s growth lately.
Rising operating expenses are harming its margins. Despite cost management efforts, operating expenses rose 25.6% year over year. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
London-based Paysafe is a digital commerce solutions provider for different businesses. The Zacks Consensus Estimate for PSFE’s 2023 earnings has improved more than 240% in the past 60 days.
Headquartered in San Francisco, Visa is a global payments technology giant. The Zacks Consensus Estimate for Visa’s current-year earnings indicates a 14.5% year-over-year increase.
Based in Portland, ME, WEX is a commerce platform operator. It operates in the United States as well as globally. The Zacks Consensus Estimate for WEX’s 2023 earnings suggests a 3.8% year-over-year rise.
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Here's Why You Should Retain Global Payments (GPN) Stock Now
Global Payments Inc.’s (GPN - Free Report) growing payment volume, ambitious acquisitions, strong-performing Merchant Solutions business and streamlining of business make it worth retaining in one’s portfolio. Investors may also check this stock out for its favorable growth estimates.
Zacks Rank & Price Performance
GPN currently carries a Zacks Rank #3 (Hold). In the past month, the stock has gained 5.1% compared with the industry’s growth of 3.2%.
Image Source: Zacks Investment Research
Rising Estimates
The Zacks Consensus Estimate for Global Payments’ 2023 earnings is pegged at $10.37 per share, indicating an increase of 11.3% from the year-ago reported figure on 6.7% higher revenues of $8.6 billion.
The consensus estimate for 2024 earnings is pegged at $11.89, suggesting a 14.7% improvement from the prior-year reported figure on 6.8% higher revenues of $9.2 billion.
Business Tailwinds
Global Payments has been witnessing growth in revenues over the last few years on the back of improving cross-border and domestic corporate travel, and transaction volumes. Merchant Solutions contributed 69.1% to total revenues in 2022. This is expected to grow further as transaction fees will boost on the back of volume growth.
Adjusted net revenue growth in the Merchant Solutions segment is estimated to stay at the higher end of the 15-16% range in 2023. The segment is set to benefit from strength in technology-enabled businesses and the recovery of Asia-Pacific business.
The company expects to deliver 5-6% net revenue growth in the Issuer Solutions segment in 2023 owing to exceptional first-quarter performance and a solid conversion pipeline. MineralTree and Netspend B2B business will grow at low double digits which, in turn, will aid the segment. Global Payments has signed multi-year extensions with M&T Bank and has nine letters of intent which will fuel growth in the future.
GPN does not hesitate to boost its global footprint with ambitious acquisitions. It acquired EVO Payments, Inc. in August 2022, a leading payments and services provider, which offers a plethora of solutions to merchants in the United States and Europe. This acquisition expands GPN’s geographic presence, supplements its B2B business and most importantly supports its technology-based payments strategy.
Global Payments divested the consumer portion of its Netspend business, aiming to focus on its core corporate customers. It also entered into a definitive agreement to sell its gaming business. This highlights its unwavering focus on building up its core operations. These moves should lead to lower expenses and improve the bottom line in the future.
GPN focuses on top-tier strategic partnerships to grow its business. It has partnered with AWS to deploy cloud-based analytics and data platform for financial institutions. It has also inked a deal with Mondu to serve financial services customers across use cases, like prepaid cards, lending solutions and credit cards. Further, it has collaborated with leading parks and entertainment companies to provide beverage and Xenial food solutions.
The company’s financial flexibility enables it to invest in technology, strategic partnerships and return capital to shareholders. GPN exited first-quarter 2023 with cash and cash equivalents of $2,001.7 million, way above the current portion of long-term debt of $1,185.3 million. It bought back shares worth $200 million in the first quarter of 2023.
An increase in capacity of the company’s share buyback program was made to bring the total authorization amount to $1,295.7 million. Hence, a strong financial position remains an additional tailwind for Global Payments. This should instill confidence in shareholders.
Key Concerns
However, a few factors have been impeding the stock’s growth lately.
Rising operating expenses are harming its margins. Despite cost management efforts, operating expenses rose 25.6% year over year. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Stocks to Consider
Some better-ranked stocks in the broader Business Services space are Paysafe Limited (PSFE - Free Report) , Visa Inc. (V - Free Report) and WEX Inc. (WEX - Free Report) . Paysafe currently sports a Zacks Rank #1 (Strong Buy), and Visa and WEX carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
London-based Paysafe is a digital commerce solutions provider for different businesses. The Zacks Consensus Estimate for PSFE’s 2023 earnings has improved more than 240% in the past 60 days.
Headquartered in San Francisco, Visa is a global payments technology giant. The Zacks Consensus Estimate for Visa’s current-year earnings indicates a 14.5% year-over-year increase.
Based in Portland, ME, WEX is a commerce platform operator. It operates in the United States as well as globally. The Zacks Consensus Estimate for WEX’s 2023 earnings suggests a 3.8% year-over-year rise.