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Global Payments (GPN) Tops Q1 Earnings, Raises Guidance

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Global Payments Inc. (GPN - Free Report) came up with first-quarter 2018 adjusted earnings of $1.13 per share, beating the Zacks Consensus Estimate of $1.09 and surging nearly 33% year over year.

Global Payments Inc. Price, Consensus and EPS Surprise

 

Better-than-expected earnings came in primarily on the back of higher revenues across all its markets.

Adjusted net revenues plus network fees were $924.3 million, up 17% year over year. The top line also surpassed the Zacks Consensus Estimate by 0.7%. .

Total operating expense of $638.8 million decreased 21.6% year over year, led by 44.6% drop in cost of service.

Adjusted operating margin expanded 140 basis points to 30.4%.

Growth Across Segments

North America: Adjusted net revenues plus network fees of $676.5 million increased 16.5% year over year. Operating income of $213.8 million was up 24.1% year over year.  

Europe: Adjusted net revenues plus network fees of $170.9 million grew 22.1% year over year. Operating income of $77.7 million increased 21.5% year over year.

Asia-Pacific: Adjusted net revenues plus network fees of $76.9 million rose 14.5% year over year. Operating income of $25.9 million grew 23.3% year over year.

Strong Financial and Balance Sheet Position

Total cash and cash equivalents as of Mar 31, 2018 were $1 billion, down from $1.3 billion as of Dec 31, 2017.

Long-term debt as of Mar 31, 2018 was $4.2 billion, down from $4.6 billion at 2017 end.

The company also approved a quarterly dividend of 1 cent per share, payable Jun 29, 2018.

2018 Guidance Upped

Given a solid first-quarter performance, the company raised its 2018 outlook.

Adjusted earnings are expected in the range of $5-$5.20 from $4.95-$5.15 per share, guided earlier. The bottom line translates into a 25-30% increase over the level in 2017.

Adjusted net revenues are estimated between $3.9 billion and $3.975 billion from $3.88-$3.97 billion, expected previously. The bottom line reflects 13-15% rise over the level in 2017.

Adjusted operating margin for 2018 is projected to grow 120 basis points.

Our Take

The company’s robust results underline its effective business execution as well as inorganic growth by acquisitions. We believe its investments will help enhancing its digital capabilities and strengthening the balance sheet to propel long-term growth.

Zacks Rank and Other Performances

Global Payments carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other Financial Transaction Services providers, Visa Inc. (V - Free Report) , Total System Services, Inc. and Alliance Data Systems Corp. emerged successful with the bottom line of each beating the respective Zacks Consensus Estimate in the last reported quarter.

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