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Global Payments (GPN) Up 6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Global Payments (GPN - Free Report) . Shares have added about 6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Global Payments due for a pullback? 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  Q1 Earnings Beat on Higher Revenues

Global Payments Inc. came up with first-quarter 2019 adjusted earnings of $1.34 per share, beating the Zacks Consensus Estimate by 3.1% and improving 18.6% year over year.

The reported quarter benefited from the company’s higher revenues, partly offset by increase in expenses.

Behind the Headlines

Adjusted net revenues plus network fees were $1.04 billion, up 13% year over year. The top line also marginally surpassed the Zacks Consensus Estimate by 0.8%, mainly driven by segmental performances.

Total operating expense of $683.5 million increased 7% year over year, led by higher cost of services, partly offset by lower selling, general and administration expenses.

Adjusted operating margin expanded 110 basis points to 31.5%.

Growth Across Segments

North America: Adjusted net revenues plus network fees of $786.4 million increased 16.2% year over year. Operating income of $262 million was up 23% year over year.

Europe: Adjusted net revenues plus network fees of $174 million grew 1.8% year over year. Operating income of $80 million rose 3% year over year.

Asia-Pacific: Adjusted net revenues plus network fees of $82.6 million climbed 7.8% year over year. Operating income of $30 million improved 15.8% year over year.

Dividend Update

Global Payments’ board of directors has approved a dividend of 1 cent per share, payable Jun 28, 2019 to shareholders of record as of Jun 14, 2019.

Balance Sheet Position

Total cash and cash equivalents as of Mar 31, 2019 were $1.3 billion, up 5.5% from Dec 31, 2018 level.

Long-term debt as of Mar 30, 2019 was $5.2 billion, up 3.1% from the level at 2018 end.

Net cash provided by operating activities for the first quarter of 2019 was $229.7 million, up 19% year over year.

2019 Outlook

For 2019, the company expects adjusted net revenues plus network fees in the band of $4.43-$4.49 billion. Adjusted EPS is projected in the range of $5.95 –$6.12, up from the previous estimate of $5.90-$6.10.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Global Payments has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Global Payments has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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