A wise investment decision involves buying well-performing stocks at the right time while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.
Global Payments Inc. GPN has performed extremely well year to date and has the potential to carry the momentum forward. Therefore, if you have not taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.
Let’s take a look at the factors that make the stock an attractive pick.
Share Price Performance: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourse year to date. Global Payments has rallied 78% compared with the industry’s growth of 41%.
Northward Estimate Revisions: 14 out of 16 estimates for the current year moved north over the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for 2019 climbed 1.3%.
Positive Earnings Surprise History: Global Payments has an impressive earnings surprise history. The company outpaced the consensus mark in each of the trailing four quarters, delivering an average beat of 2.42%.
Solid Prospects: The Zacks Consensus Estimate for 2019 earnings is pegged at $6.17, indicating year-over-year growth of 18.9%. Moreover, earnings are expected to register 21.7% growth in 2020. The stock has a long-term expected earnings growth rate of 21.9%, which is higher than the industry’s growth of 16.4%
Growth Factors: Global Payments has completed the acquisition of Total System Services. The deal has given it a significant exposure to fast growing markets globally with physical and virtual presence in more than 100 countries. The highly complementary nature of these leading payments-focused businesses provides for significant revenue enhancement opportunities.
Global Payments has sustained growth for long. Its revenues witnessed a CAGR of 10.5% between 2008 and 2018 and were further up 17.6% in the first nine months of 2019. Notably, the company consistently pursues acquisitions, enters into alliances and joint ventures. These factors are likely to fuel business growth and add to the top line. Moreover, there is ever-increasing demand for electronic payment transactions, which provide the company with abundant scope for growth. For 2019, it expects adjusted net revenues plus network fees to be $5.6-$5.63 billion, suggesting growth of 41-42%.
Ongoing investments in technology has led to the shift of its business mix toward technology enablement, which is expected to represent 60% of the company’s revenues (up from 30% in 2015) and drive a significant portion of total growth by the end of 2020, with a balanced portfolio across owned SaaS, partnered software, and ecomm and omni-channel assets. The acquisitions of APT in 2012, PayPros in 2014 and Heartland in 2016 have expanded the company’s technology platform. Very recently, it expanded its open software portfolio with the acquisitions of AdvancedMD and SICOM. The company’s robust technology solutions will position it for long-term growth.
Zacks Rank & Other Stocks to Consider
Global Payments sports a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
A few other top-ranked stocks in the broader Zacks Business Services sector are Fiserv, Inc.FISV, Mastercard MA and Cardtronics CATM . While Cardtronics sports a Zacks Rank #1, Mastercard and Fiserv carry a Zacks Rank #2 (Buy).
Long-term expected EPS (three to five years) growth rate for Fiserv, Mastercard and Cardtronics is 13.8%, 16% and 4%, respectively.
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Cardtronics PLC (CATM) : Free Stock Analysis Report
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