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Global Payments (GPN) Down 1.9% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Global Payments Inc. (GPN - Free Report) . Shares have lost about 1.9% in that time frame.

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

Global Payments Tops Q1 Earnings, Raises Guidance

Global Payments 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.

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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been nine revisions higher for the current quarter compared to two lower.

Global Payments Inc. Price and Consensus

 

Global Payments Inc. Price and Consensus | Global Payments Inc. Quote

VGM Scores

At this time, GPN has an average Growth Score of C, a grade with the same score on the momentum front. The stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Based on our scores, the stock is equally suitable for value, growth and momentum investors.

Outlook

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




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