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Global Payments Up More Than 40% This Year: More Room to Run?

Zacks Equity Research

Global Payments Inc. GPN shares have surged 45% this year so far compared with the industry’s rally of 28%. The upside can be attributed to inorganic and organic growth that has led to consistent operating performance.

This Zacks Rank #2 (Buy) company is a leading player in the payments industry, providing payment technology and software solutions, and credit and debit card transaction processing.


The company missed earnings estimates in only one of the past 21 reported quarters.

Reasons Behind the Share Price Surge

The company’s vast global footprint, innovative technology solutions, scalable operating environment and technology infrastructure, long-lasting partner relationships and a disciplined acquisition approach have enabled it to build a formidable position in the payments industry.

It has payment verticals and integrated software offerings in restaurant, education as well as healthcare space.

These investments have been possible by virtue of the company’s strong cash position. Its financial flexibility along with disciplined business approach has fueled overall growth.

This is reflected in the company’s top-line growth, which witnessed a CAGR of 10.5% between 2008 and 2018.

Will the Momentum Continue?

Global Payments’ business profile places it uniquely to gain from the changing payments industry, which was previously dominated by paper-based transactions. There has been a shift in industries such as education, government, healthcare as well as recurring payments, and business-to-business payments with an increase in electronic-based transactions.

This provides enough scope for the company to grow and should lead to long-term revenue growth. For 2019, the company expects adjusted net revenue plus network fees to range from $4.43 billion to $4.49 billion, indicating growth of 12% to 13% over 2018.

An increase in revenues along with gains from operating leverage should trickle down to earnings per share and margin gain. For 2019, the company expects adjusted EPS in the range of $5.95–$6.12 (versus $5.90-$6.10 earlier), indicating growth of 15% to 18% over 2018. Annual adjusted operating margin for 2019 is expected to expand up to 80 basis points (versus prior 70).

The company’s niche position in a thriving industry will continue to push up its stock price.

Some other top-ranked stocks in the same space are WEX Inc. WEX, Cardtronics plc CATM and FleetCor Technologies, Inc. FLT  While Cardtronics and WEX sport a Zacks Rank #1 (Strong Buy), FleetCor carries the same Zacks Rank as Global Payments. 

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

WEX, Cardtronics and FleetCor surpassed estimates in each of the four quarters with the average positive surprise being 2.12%, 43.8% and 1.71%, respectively.

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Cardtronics PLC (CATM) : Free Stock Analysis Report
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