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Global Payments (GPN) Beats Q1 Earnings, Outlook Bullish

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Global Payments Inc. (GPN - Free Report) reported solid first-quarter fiscal 2017 results (ended Aug 31, 2016) with a healthy year-over-year increase in earnings. GAAP earnings for the reported quarter were $85.1 million or 55 cents per share compared with $86.6 million or 66 cents per share in the year-ago quarter.

Adjusted earnings for the reported quarter were $133.7 million or 86 cents per share up from $103 million or 79 cents per share. Adjusted earnings beat the Zacks Consensus Estimate by 7 cents.

Revenues

Adjusted net sales in the reported quarter were $817.3 million compared with $537 million in the year-earlier quarter. Adjusted revenues for fiscal first quarter 2017 were ahead of the Zacks Consensus Estimate of $812 million. Increase in sales was due to significant increase in revenues in North America and Asia, as well as escalating organic growth across various markets. During the quarter, the company’s recent acquisition, Heartland saw strong growth momentum in the U.S.

By geographic segments, non-GAAP revenues in North America increase by 78.8% to $608.7 million, from $340.4 million in fiscal first quarter 2016. In Europe, non-GAAP revenues were $150.4 million, versus $146.9 million in the year-ago quarter. Asia-Pacific recorded non-GAAP sales of $58.2 million compared with $49.6 million in the year-ago quarter, a significant increase of 17.3%.

GLOBAL PAYMENTS Price, Consensus and EPS Surprise

 

GLOBAL PAYMENTS Price, Consensus and EPS Surprise | GLOBAL PAYMENTS Quote

Margins

Adjusted operating income increased to $240.7 million, up 47.2% from $163.6 million in the year-ago quarter. Adjusted operating margin was 29.5%, while that on constant currency basis was 29.9%.

Other Financial Details

As of Aug 31, 2016, Global Payments had cash and cash equivalents of $977.8 million and cash from operating activities was $155.7 million. Long-term debt at quarter end was $4,289.7 million.

Guidance

For fiscal 2017, Global Payments projects adjusted earnings per share in a range of $3.45 to $3.55, representing 16% to 19% growth over fiscal 2016. It expects adjusted revenues to be in the range $3.2 billion to $3.3 billion, reflecting a year-over-year increase of 47% to 52%.

Currently, Global Payments carries a Zacks Rank #2 (Buy). Investors interested in the finance sector may also consider Equifax Inc. (EFX - Free Report) , MasterCard Incorporated (MA - Free Report) and Visa Inc. (V - Free Report) . All three stocks carry the same Zacks Rank as Global Payments. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Visa belongs to the financial transaction service provider space. It has a long-term earnings growth expectation of 16.1% and is currently trading at a forward P/E of 25x. The company’s share price has increased by approximately 6.7% year to date.

Equifax, a financial transaction services provider, has a long-term earnings growth expectation of 16.1% and is currently trading at a forward P/E of 25x. Its share price has increased by approximately 6.7% year to date.

MasterCard, another financial transaction services provider, has a long-term earnings growth expectation of 15.5% and is currently trading at a forward P/E of 27.8x. Its share price has increased by approximately 4% year to date.

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