Yahoo Finance Here's Why You Should Hold Global Payments (GPN) Stock for Now
Global Payments Inc. GPN is well poised to grow on the back of the increase in travel and entertainment-related spending. Its strategic acquisitions and partnerships bode well. However, rising costs can affect profits.
Global Payments — with a market cap of $26.8 billion — is a payment solutions provider based in Atlanta, GA. It provides innovative software and services all around the globe. The payments technology company has a massive network including North America, Latin America, Europe and the Asia Pacific.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Trend in Estimates
The Zacks Consensus Estimate for Global Payments’ 2022 earnings is pegged at $9.38 per share, indicating a 15% year-over-year rise. The company beat earnings estimates in two of the last four quarters, met once and missed on the other occasion, with an average surprise of 0.5%.
Global Payments Inc. Price and EPS Surprise
Global Payments Inc. price-eps-surprise | Global Payments Inc. Quote
Furthermore, the consensus mark for revenues is pegged at $8 billion for 2022, indicating a 3.9% year-over-year rise.
Key Drivers
The growing demand for digital payment methods is expected to support Global Payments’ transaction volume growth. In the third quarter, its commercial card transactions grew 25% year over year. The momentum is not expected to subside anytime soon. This will continue supporting the company’s revenue growth. GPN expects 2022 adjusted net revenues to grow 8.9-9.8% from the 2021 reported figure.
With the relaxation of COVID-19-related restrictions, spending on travel and entertainment is bound to rise. Despite inflationary pressure, consumer spending keeps growing, which is good news for GPN. Also, the company’s ongoing investments in technology are leading to a shift in its business mix toward technology enablement, which will support its strong financial performance.
Global Payments’ strategic acquisitions to grow its overall business are effectively boosting its scale. It strengthened the technology platform through buyouts like APT, PayPros, Heartland, etc. Also, acquisitions of Total System Services, Zego, Mineral Tree and others are improving its presence in multiple fields across various markets. It is now looking forward to acquiring leading payment technology and services provider EVO Payments EVOP for $4 billion to strengthen its footprint in the business-to-business space.
Its financial flexibility enables the company to focus on strategic investments and return capital to shareholders. GPN exited the third quarter with cash and cash equivalents of $1,993.8 million, way above the current portion of long-term debt of $1,157.8 million.
In the first nine months of 2022, net cash provided by operating activities came in at $1,534.5 million. It bought back shares worth $889.7 million during the third quarter. An increase in the capacity of GPN’s share buyback program was made to bring the total authorization amount to $1.5 billion.
Key Concerns
There are a few factors that are impeding the growth of the stock.
Increasing costs are eating into its profits. Despite implementing multiple cost-control measures, the company's operating expenses are on the rise. In the first nine months of 2022, its operating costs rose 22.6% year over year, which incorporated a significant amount of goodwill impairment charges. This can dent the company's profit levels.
Rising competition in the payment market is concerning. Emerging payment companies with significant growth potential are capturing markets at a faster rate. Nevertheless, we believe that a systematic and strategic plan of action will drive GPN’s long-term growth.
Better-Ranked Players
Some better-ranked stocks in the broader Business Services space are PaySign, Inc. PAYS and Avis Budget Group, Inc. CAR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Based in Henderson, NV, PaySign offers prepaid card products and processing services. The Zacks Consensus Estimate for PAYS’ 2022 earnings indicates a 340% year-over-year surge.
Headquartered in Parsippany, NJ, Avis Budget Group provides car and truck rental and other services. The Zacks Consensus Estimate for CAR’s 2022 bottom line signals 134.6% year-over-year growth.
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Avis Budget Group, Inc. (CAR) : Free Stock Analysis Report
Global Payments Inc. (GPN) : Free Stock Analysis Report
EVO Payments, Inc. (EVOP) : Free Stock Analysis Report
Paysign, Inc. (PAYS) : Free Stock Analysis Report
