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Global Payments (GPN) Q4 Earnings Beat Estimates, Rise Y/Y

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Global Payments Inc.’s GPN fourth-quarter 2020 adjusted earnings of $1.80 per share beat the Zacks Consensus Estimate by 1.7%. Also, the bottom line improved 11.1% year over year.

Adjusted net revenues declined 2.9% year over year to $1.75 billion. Moreover, the top line missed the Zacks Consensus Estimate by 0.6%.

Total expenses were down 6.3% year over year to $1.68 billion owing to lower cost of service.

The company’s results reflect constant market recovery and cost-control efforts, which have been driving margins for a while. However, this upside is partially offset by softer revenues across other two segments barring Business and Consumer Solutions.

Global Payments Inc. Price, Consensus and EPS Surprise

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

Global Payments Inc. price-consensus-eps-surprise-chart | Global Payments Inc. Quote

Full-Year Update

Adjusted net revenues dipped 5.2% to $6.75 billion. Adjusted earnings per share inched up 2.9% to $6.40.

Segmental Performances

Merchant Solutions: Adjusted revenues of $1.11 billion decreased 4.2% year over year. Operating income of $528.1 million was up 1.1% year over year.

Issuer Solutions: Adjusted net revenues of $457 million slid 0.4% year over year. Operating income of $204 million increased 10.5% year over year.

Business and Consumer Solution: Adjusted net revenues came in at $204.7 million, up 2.6% year over year. Operating income was $49.4 million, up 15.5% year over year.

Balance Sheet Position (as of Dec 31, 2020)

Total cash and cash equivalents were $1.95 billion, which surged 15.9% from the level as of Dec 31, 2019.

Long-term debt was $8.5 billion, down 6.7% from the level at 2019 end.

Share Repurchase and Dividend Update

The board of directors cleared a dividend of 19.5 cents per share, payable Mar 26, 2021 to its shareholders of record as of Mar 12, 2021 and also approved an increase in the company’s existing authorization of its share buyback program, raising the total available stock to $1.5 billion.

As part of that plan, it intends to execute an accelerated share repurchase program for $500 million in the coming days.

Net cash provided by operating activities in 2020 was $2.3 billion, up 66% year over year.

2021 Guidance

The company expects 2021 adjusted net revenues in the range of $7.50-$7.60 billion, indicating growth of 11-13%. Adjusted earnings per share are likely to be in the $7.75 and $8.05 band, suggesting growth of 21-26% from the 2020 reported figure.

Zacks Rank and Stocks to Consider

Global Payments carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space are Diebold Nixdorf, Incorporated DBD, The Western Union Co. WU and WEX Inc. WEX, each carrying a Zacks Rank #2 (Buy), presently.

The Zacks Consensus Estimate for 2021 earnings of Diebold Nixdorf, Western Union and WEX Inc. is pegged at 35.1%, 9.26% and 35.1% growth, respectively.

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