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Why Is Global Payments (GPN) Down 2.7% Since Last Earnings Report?

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It has been about a month since the last earnings report for Global Payments (GPN - Free Report) . Shares have lost about 2.7% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Global Payments 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 drivers.

Global Payments Beats on Q2 Earnings, Raises 2019 View

Global Payments, Inc. came up with second-quarter 2019 adjusted earnings of $1.51 per share, beating the Zacks Consensus Estimate by 3.4% and improving 17.1% year over year.

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

Behind the Headlines

The company’s revenues of $1.14 billion, were up 13.4% year over year.

The top line marginally surpassed the Zacks Consensus Estimate by 0.8%, mainly driven by segmental performances.

Total operating expenses of $713 million increased 11% year over year, led by higher cost of services as well as selling, general and administration expenses.

Adjusted operating margin expanded 100 basis points to 32.4%.

Growth Across Segments

North America: Adjusted net revenues plus network fees of $840.4 million increased 17% year over year. Operating income of $285.9 million was up 23% year over year.

Europe: Adjusted net revenues plus network fees of $194.9 million grew 2.5% year over year. Operating income of $94.7 million rose 5.1% year over year.

Asia-Pacific: Adjusted net revenues plus network fees of $79.2 million climbed 7.3% year over year. Operating income of $26.2 million improved 12.6% year over year.

Dividend Update

Global Payments’ board of directors has approved a dividend of 1 cent per share, to be paid out on Sep 27, 2019 to shareholders as of Sep 13, 2019.

Balance Sheet Position

Total cash and cash equivalents as of Jun 30, 2019 were $1.04 billion, up 13.3% from Dec 31, 2018 level.

Long-term debt as of Jun 30, 2019 was $5 billion, almost unchanged from year-end 2018 levels.

Net cash provided by operating activities for the second quarter of 2019 was $247.3 million, down 51% year over year.

2019 Outlook

The company raised its earnings outlook in the range of $6.00-$6.15, indicating growth of 16-18% over 2018 (compared with the earlier guidance of $5.95 –$6.12). For 2019, it expects adjusted net revenues plus network fees in the band of $4.44-$4.49 billion, suggesting growth of 12-13%.
Adjusted operating margin is expected to expand by 90 basis points.


How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Global Payments has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. 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.


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 #3 (Hold). We expect an in-line return from the stock in the next few months.

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