Global Payments (GPN) to Post Q3 Earnings: What's in the Cards?
Global Payments Inc. GPN is set to report its third-quarter 2022 results on Oct 31, before the opening bell.
In the last reported quarter, the leading payment technology company’s adjusted earnings of $2.36 per share met the Zacks Consensus Estimate, thanks to strong performances across its Merchant Solutions and Issuer Solutions segments. Global Payments achieved strong performance in the second quarter despite headwinds related to the exit of its Russia business and adverse foreign currency fluctuations. However, an elevated operating expense level partly offset the upside.
Let’s see how things have shaped up prior to the third-quarter earnings announcement.
The Trend in Estimate Revision
The Zacks Consensus Estimate for third-quarter earnings per share of $2.49 suggests a 14.2% increase from the prior year's reported figure of $2.18. It witnessed no upward revision in the past week versus two in the opposite direction. Global Payments beat the consensus estimate for earnings in three of the prior four quarters and met once, the average surprise being 1.1%. This is depicted in the graph below:
Global Payments Inc. Price and EPS Surprise
Global Payments Inc. price-eps-surprise | Global Payments Inc. Quote
The consensus estimate for third-quarter revenues of $2.1 billion indicates a 2.7% increase from the year-ago reported figure.
Factors to Note
In the third quarter, profits from GPN’s Merchant Solutions — its biggest operating segment — are likely to have increased from higher customer spending. Higher travel and entertainment-related spendings are expected to have benefited the company’s performance, positioning GPN for year-over-year growth.
The Zacks Consensus Estimate for revenues from Merchant Solutions is pegged at $1,481 million, indicating a rise from $1,358 million reported in the year-ago period. Strong software businesses and the continued execution of a technology-enabled strategy are expected to have driven the segment’s performance.
The consensus mark for Issuer Solutions’ revenues is pegged at $497 million, signaling an increase from $458 million reported in third-quarter 2021. The addition of the leading accounts payable automation, as well as business-to-business payments solutions provider MineralTree, is likely to have aided the segment’s performance.
However, the Zacks Consensus Estimate for revenues from the Business and Consumer Solutions segment indicates an 8.7% year-over-year decrease. Higher levels of unemployment assistance benefits are anticipated to have affected the segment.
Profits from the business are likely to have been partially offset by increased operating costs in the third quarter, making an earnings beat uncertain. Higher cost of service, and selling, general and administrative expenses are likely to have affected the bottom line. Continuous investments to upgrade digital capabilities are expected to have weighed on the margins.
Earnings Whispers
Our proven model does not conclusively 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 chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company’s Earnings ESP is -0.67%. This is because the Most Accurate Estimate is currently pegged at $2.47 per share, lower than the Zacks Consensus Estimate of $2.49.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Global Payments currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Global Payments, here are some companies from the Business Services space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Shift4 Payments, Inc. FOUR has an Earnings ESP of +3.57% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Shift4 Payments’ bottom line for the to-be-reported quarter indicates a 61.5% increase from the year-ago quarter’s reported figure. FOUR’s earnings beat estimates in two of the last four quarters, met the mark once and missed on another occasion, the average surprise being 4.2%.
Confluent, Inc. CFLT has an Earnings ESP of +1.92% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Confluent’s bottom line for the to-be-reported quarter has been unchanged in the past week. CFLT beat on earnings in each of the last four quarters, the average surprise being 16.3%.
SoFi Technologies, Inc. SOFI has an Earnings ESP of +11.27% and a Zacks Rank #2.
The Zacks Consensus Estimate for SoFi Technologies’ bottom line for the to-be-reported quarter has been unchanged in the past week. The consensus mark for SOFI’s top line is pegged at $391 million, signaling a 41.1% year-over-year increase.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Global Payments Inc. (GPN) : Free Stock Analysis Report
Shift4 Payments, Inc. (FOUR) : Free Stock Analysis Report
SoFi Technologies, Inc. (SOFI) : Free Stock Analysis Report
Confluent, Inc. (CFLT) : Free Stock Analysis Report
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