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Is a Beat in Store for Global Payments' (GPN) Q4 Earnings?

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Global Payments Inc. (GPN - Free Report) is slated to report fourth-quarter 2019 results on Feb 12, before market open.

The Zacks Consensus Estimate for the company’s earnings per share is pegged at $1.59, indicating an increase of 19.6% from the year-ago quarter’s reported figure. The consensus mark for revenues is pegged at $2.16 billion, suggesting an increase of 163.7% from the year-ago quarter’s reported figure.

Let’s see how things have shaped up for this announcement.

In the the last quarter, the company completed its landmark merger with Total System that brought together two industry leaders and positioned the new Global Payments as the premier pure-play payment technology company at scale globally.  The acquisition of Total System is likely to have accrued to the company’s overall revenues and bottom line.

Global Payments' performance in the to-be-reported quarter is likely to have benefited from increase in payments processing volumes and merchant services volumes growth. We also expect to see growth in the company’s U.S. direct business.

In its Europe business, the company is likely to have gained from strength in businesses in Spain and Central Europe. Its European e-com and omni solutions business is expected to have boosted growth as the company has enhanced its differentiated capabilities in unified commerce platform.
The company’s Asia Pacific business is likely to be negatively impacted by ongoing disruption in HongKong.

In the Issuer solutions business, the conversion of the Capital One Walmart portfolio in October might have aided the segment’s performance in the fourth quarter.

Company’s Guidance

The company expects adjusted net revenue plus network fees between $5.60 billion and $5.63 billion, indicating growth of 41-42% over 2018.  It also expects adjusted earnings per share of $6.12 to $6.20, suggesting growth of 18% to 20% over 2018.

Inclusive of Total System from the date of merger, the company anticipates adjusted operating margin expansion of up to 40 basis points for 2020.

Earnings Surprise History

The company has an attractive earnings surprise history. It surpassed estimates in the trailing four quarters, the surprise being 2.42%, on average. This is depicted in the chart below:

What Our Quantitative Model Predicts

Our proven model does not predict an earnings beat for Global Payments this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But this is not the case here.

Earnings ESP: Global Payments has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.59 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Global Payments carries a Zacks Rank #3.

Stocks to Consider

Some stocks from the finance sector with the apt combination of elements to surpass estimates this reporting cycle are as follows:

Moody's Corporation (MCO - Free Report) is slated to report fourth-quarter earnings on Feb 12. It has a Zacks Rank of 2 and an Earnings ESP of +0.57%.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Sun Life Financial Inc. (SLF - Free Report) is set to report fourth-quarter earnings on Feb 12. The company is Zacks #2 Ranked and has an Earnings ESP of +1.27%.

AXA Equitable Holdings, Inc. (EQH - Free Report) is slated to announce fourth-quarter earnings on Feb 27. The stock has an Earnings ESP of +0.18% and is a #2 Ranked player.

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