It has been about a month since the last earnings report for Global Payments (GPN). Shares have lost about 2.1% in that time frame, underperforming 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'Q1 Earnings Beat Estimates, Rise Y/Y
Global Payments earnings of $1.82 per share beat the Zacks Consensus Estimate by 2.8%. Also, the bottom line improved 15% year over year on the back of better revenues.
Additionally, adjusted net revenues increased 5% year over year to $1.81 billion. Moreover, the top line beat the Zacks Consensus Estimate by 2.7%.
Total expenses were up 3.3% year over year to $1.71 billion due to higher selling, general and administrative costs.
The company’s results reflect constant market recovery and better performances by its Merchant Solutions, and Business and Consumer Solution segments.
Favorable Segmental Performances
Merchant Solutions: Adjusted revenues of $1.1 billion increased 4.4% year over year. Operating income of $532.1 million was up 6.3% year over year.
Issuer Solutions: Adjusted net revenues of $439.3 million slid 0.6% year over year. Operating income of $189.7 million increased 8.7% year over year.
Business and Consumer Solution: Adjusted net revenues came in at $243.5 million, up 19.4% year over year. Operating income was $80.8 million, up 54.1% year over year.
Balance Sheet Position (as of Mar 31, 2021)
Total cash and cash equivalents were $2.08 billion, which rose 7% from the level as of Dec 31, 2020.
Long-term debt was $9.6 billion, up 13.7% from the level at 2020 end.
Share Repurchase and Dividend Update
The board of directors cleared a dividend of 19.5 cents per share, payable Jun 25, 2021 to its shareholders of record as of Jun 11, 2021.
Net cash provided by operating activities in the first quarter of 2021 was $599.4 million, up 37.3% year over year.
The company now expects 2021 adjusted net revenues in the range of $7.550-$7.625, up from the previous range of $7.50-$7.60 billion.
Adjusted earnings per share are likely to be in the $7.87-$8.07 band, up from the prior forecast of $7.75-$8.05. The midpoint reflects an upside of 24.5% from 2020’s reported figure.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
At this time, Global Payments has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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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