It has been about a month since the last earnings report for Global Payments (GPN). Shares have added about 5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Global Payments due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Global Payments Q1 Earnings Beat Despite Coronavirus Woes
Global Payments, Inc. came up with first-quarter 2020 adjusted earnings of $1.58 per share, beating the Zacks Consensus Estimate by 9.7% and also improving 17.9% year over year.
The quarterly results reflect higher revenues, driven by the acquisition of
Total System made in second-quarter 2019, partly offset by an increase in expenses.
The company’s first-quarter results bettered the projections provided in its early-April announced preliminary results wherein it estimated adjusted net revenues for the first quarter to be up slightly on a combined basis and adjusted earnings per share to grow approximately in mid-teens compared with the prior year, on constant currency basis.
Adjusted revenues of $1.73 billion inched up 0.2% year over year but missed the Zacks Consensus Estimate by 1%.
Merchant Solutions: Adjusted revenues of $1.10 billion increased 1.7% year over year. Operating income of $500.4 million was up 46.9% year over year.
Issuer Solutions: Adjusted net revenues plus network fees of $459 million rose 0.7% year over year. Operating income of $174.6 million increased 13.1% year over year.
Business and Consumer Solution: This segment was formed after the acquisition of Total System. It reported adjusted net revenues plus network fees of $203.9 million, down 6.9% year over year. Operating income was $52.5 million, down 9.1% year over year.
Balance Sheet Position (as of Mar 31, 2020)
Total cash and cash equivalents were $1.8 billion, up 7.3% from the level as of Dec 31, 2019.
Long-term debt was $9.6 billion, up 6% from the level at 2019 end.
Net cash provided by operating activities for 2020 was $0.44 million, up 90% year over year.
The company approved a dividend of 19.5 cents per share, payable Jun 26, 2020 to its shareholders of record as of Jun 12.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
Currently, Global Payments has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Global Payments has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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