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Global Payments (GPN) to Report Q3 Earnings: What Awaits?
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Global Payments Inc.’s (GPN - Free Report) third-quarter earnings scheduled for Oct 30, 2018, should reflect revenue and earnings growth.
The company has witnessed revenue growth for the past several quarters and the trend is expected to continue in the to-be-reported quarter, led by accretion from the merger with Heartland Payments, other alliances and joint ventures. Moreover, there is ever-increasing demand for electronic payment transactions, which provide the company abundant scope for top-line growth.
Region-wise, the United States should show higher revenues led by its direct distribution business, partly offset by a decline in the wholesale business. Europe should benefit from increased business in Spain, reflecting ongoing strength in share gains. Its ecommerce and omnichannel solutions business should grow as it continues to win in the Europe market with differentiated offerings. Results in U.K. must have been driven by transaction and volume growth, as the company gained additional market share. Asia Pacific business should show strong growth from Hong Kong, the Philippines and Taiwan, and Ezidebit and eWAY (two of the company’s units) should contribute meaningfully to growth in the region.
The company is witnessing ongoing strength in its worldwide e-commerce and omni solutions business, which in the second quarter grew in the high teens year over year, further progressing toward the 20% revenue contribution target set by the company for 2020. We expect strength to continue in this business in the to-be-reported quarter.
Global Payments completed the acquisition of AdvancedMD,a leading provider of cloud-based software as a service, or SaaS solutions, to small-to-medium-sized physician practices in the United States, in September. For the third quarter of 2018, the company expects AdvancedMD to contribute to revenues in a range of approximately $7 million to $8 million and have no impact on earnings per share.
As a result of this transaction, the company’s pro-forma leverage should increase modestly to approximately 3.8 times. Also, net interest in the third and fourth quarters should increase due to the additional debt incurred to finance the AdvancedMD transaction.
A reduction in the tax rate in the range of 22% to 23%, down from approximately 26.5% in 2017, should aid margins.
The company is facing some incremental pressure from foreign currency and anticipates the same to be a headwind in the third and fourth quarters.
Earnings Surprise History
The company boasts an attractive earnings surprise history. It beat estimates in each of the last four reported quarters, with an average positive surprise of 3.97%. This is depicted in the chart below:
Our proven model does not conclusively show that Global Payments is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: Global Payments has an Earning ESP of -0.69%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Global Payments carries a Zacks Rank #3, its negative Earnings ESP makes our surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
WEX Inc. (WEX - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank #2. The company is expected to report third-quarter earnings results on Oct 31.
Cardtronics PLC has an Earnings ESP of +3.2% and a Zacks Rank #1. The company is expected to report third-quarter earnings results on Nov 1.
EVO Payments, Inc. has an Earnings ESP of +1.17% and a Zacks Rank #3. The company is expected to report third-quarter earnings results on Nov 7.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Global Payments (GPN) to Report Q3 Earnings: What Awaits?
Global Payments Inc.’s (GPN - Free Report) third-quarter earnings scheduled for Oct 30, 2018, should reflect revenue and earnings growth.
The company has witnessed revenue growth for the past several quarters and the trend is expected to continue in the to-be-reported quarter, led by accretion from the merger with Heartland Payments, other alliances and joint ventures. Moreover, there is ever-increasing demand for electronic payment transactions, which provide the company abundant scope for top-line growth.
Region-wise, the United States should show higher revenues led by its direct distribution business, partly offset by a decline in the wholesale business. Europe should benefit from increased business in Spain, reflecting ongoing strength in share gains. Its ecommerce and omnichannel solutions business should grow as it continues to win in the Europe market with differentiated offerings. Results in U.K. must have been driven by transaction and volume growth, as the company gained additional market share. Asia Pacific business should show strong growth from Hong Kong, the Philippines and Taiwan, and Ezidebit and eWAY (two of the company’s units) should contribute meaningfully to growth in the region.
The company is witnessing ongoing strength in its worldwide e-commerce and omni solutions business, which in the second quarter grew in the high teens year over year, further progressing toward the 20% revenue contribution target set by the company for 2020. We expect strength to continue in this business in the to-be-reported quarter.
Global Payments completed the acquisition of AdvancedMD,a leading provider of cloud-based software as a service, or SaaS solutions, to small-to-medium-sized physician practices in the United States, in September. For the third quarter of 2018, the company expects AdvancedMD to contribute to revenues in a range of approximately $7 million to $8 million and have no impact on earnings per share.
As a result of this transaction, the company’s pro-forma leverage should increase modestly to approximately 3.8 times. Also, net interest in the third and fourth quarters should increase due to the additional debt incurred to finance the AdvancedMD transaction.
A reduction in the tax rate in the range of 22% to 23%, down from approximately 26.5% in 2017, should aid margins.
The company is facing some incremental pressure from foreign currency and anticipates the same to be a headwind in the third and fourth quarters.
Earnings Surprise History
The company boasts an attractive earnings surprise history. It beat estimates in each of the last four reported quarters, with an average positive surprise of 3.97%. This is depicted in the chart below:
Global Payments Inc. Price and EPS Surprise
Global Payments Inc. Price and EPS Surprise | Global Payments Inc. Quote
Here is what our quantitative model predicts:
Our proven model does not conclusively show that Global Payments is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: Global Payments has an Earning ESP of -0.69%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Global Payments carries a Zacks Rank #3, its negative Earnings ESP makes our surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
WEX Inc. (WEX - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank #2. The company is expected to report third-quarter earnings results on Oct 31.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardtronics PLC has an Earnings ESP of +3.2% and a Zacks Rank #1. The company is expected to report third-quarter earnings results on Nov 1.
EVO Payments, Inc. has an Earnings ESP of +1.17% and a Zacks Rank #3. The company is expected to report third-quarter earnings results on Nov 7.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>