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Global Payments (GPN) Q1 Earnings Beat on Higher Revenues

Zacks Equity Research

Global Payments Inc. GPN came up with first-quarter 2019 adjusted earnings of $1.34 per share, beating the Zacks Consensus Estimate by 3.1% and improving 18.6% year over year.

The reported quarter benefited from the company’s higher revenues, partly offset by increase in expenses.

Behind the Headlines

Adjusted net revenues plus network fees were $1.04 billion, up 13% year over year. The top line also marginally surpassed the Zacks Consensus Estimate by 0.8%, mainly driven by segmental performances.

Total operating expense of $683.5 million increased 7% year over year, led by higher cost of services, partly offset by lower selling, general and administration expenses.

Adjusted operating margin expanded 110 basis points to 31.5%.

Global Payments Inc. Price, Consensus and EPS Surprise

Global Payments Inc. Price, Consensus and EPS Surprise | Global Payments Inc. Quote

Growth Across Segments

North America: Adjusted net revenues plus network fees of $786.4 million increased 16.2% year over year. Operating income of $262 million was up 23% year over year.

Europe: Adjusted net revenues plus network fees of $174 million grew 1.8% year over year. Operating income of $80 million rose 3% year over year.

Asia-Pacific: Adjusted net revenues plus network fees of $82.6 million climbed 7.8% year over year. Operating income of $30 million improved 15.8% year over year.

Dividend Update

Global Payments’ board of directors has approved a dividend of 1 cent per share, payable Jun 28, 2019 to shareholders of record as of Jun 14, 2019.

Balance Sheet Position

Total cash and cash equivalents as of Mar 31, 2019 were $1.3 billion, up 5.5% from Dec 31, 2018 level.

Long-term debt as of Mar 30, 2019 was $5.2 billion, up 3.1% from the level at 2018 end.

Net cash provided by operating activities for the first quarter of 2019 was $229.7 million, up 19% year over year.

2019 Outlook

For 2019, the company expects adjusted net revenues plus network fees in the band of $4.43-$4.49 billion. Adjusted EPS is projected in the range of $5.95 –$6.12, up from the previous estimate of $5.90-$6.10.

Zacks Rank and Performances of Other Industry Players

Global Payments carries a Zacks Rank #4 (Sell).

 You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Stocks

Alliance Data Systems Corp.’s ADS operating earnings of $3.55 per share for the first quarter of 2019 missed the Zacks Consensus Estimate of $3.76. The bottom line declined 13.4% year over year.

Visa Inc. V reported second-quarter fiscal 2019 earnings of $1.31 per share, beating the Zacks Consensus Estimate by 5.65%. Also, the bottom line improved 18% year over year. The results were driven by growth in payments volume, cross-border volume and processed transactions.

Total System Services, Inc.’s TSS first-quarter 2019 earnings per share of $1.15 surpassed the Zacks Consensus Estimate by 2.9% and also jumped nearly 4.5% year over year. Strong performance by all three segments — Issuer Solutions, Merchant Solutions and Consumer Solutions — contributed to the favorable results.

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