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Global Payments (GPN) to Post Q1 Earnings: What's in the Cards?

Global Payments Inc. GPN is set to report its first-quarter 2023 results on May 1, before the opening bell.

What Do the Estimates Say?

The Zacks Consensus Estimate for first-quarter earnings per share of $2.29 suggests a 10.6% increase from the prior-year figure of $2.07. The consensus mark witnessed no movement in the past week. Our estimate suggests a 12% year-over-year increase in the bottom line. Global Payments beat the consensus estimate for earnings in one of the prior four quarters, met once and missed on the other two occasions, with the average surprise being in the negative zone. This is depicted in the graph below:

Global Payments Inc. Price and EPS Surprise

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

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

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Both the consensus mark and our estimate for first-quarter revenues of $2 billion indicate a 2.6% increase from the year-ago reported figure.

Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at GPN’s previous-quarter performance first.

Q4 Earnings Rewind

In the last reported quarter, the leading payment technology company’s adjusted earnings of $2.42 per share missed the Zacks Consensus Estimate by 1.2%, due to elevated selling, general and administrative expense levels, coupled with a considerable increase in interest and other expenses. Nevertheless, the downside was partly offset by strong performances put forward by GPN’s Merchant and Issuer businesses.

Now let’s see how things have shaped up prior to the first-quarter earnings announcement.

Q1 Factors to Note

In the first quarter, profits from GPN’s Merchant Solutions — its biggest operating segment — are likely to have increased from global constant currency volume growth and resilient customer spending. Increased travel and entertainment-related spendings are expected to have benefited the company’s performance.

Both the Zacks Consensus Estimate and our estimate for revenues from Merchant Solutions are pegged at $1,631.7 million, indicating a 10.8% increase from the year-ago period. The strong software businesses and continued execution of a technology-enabled strategy are likely to have aided the segment’s results.

The consensus mark as well as our estimate for Issuer Solutions’ adjusted revenues is pegged at $569.6 million, signaling 6% year-over-year growth from the first quarter of 2022. 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. These are expected to have positioned GPN for year-over-year growth.

However, the Zacks Consensus Estimate and our estimate for revenues from the Consumer Solutions segment indicate an 18.5% year-over-year decrease. Higher levels of unemployment assistance benefits are expected to have affected the segment. The consensus estimate predicts lower profit from the segment in the first quarter.

Profits from the business are likely to have been partially offset by increased operating costs in the first quarter, making an earnings beat uncertain. Higher selling, general and administrative expenses are likely to have affected the bottom line. We expect total operating expenses to have jumped around 1% year over year. Continuous investments to upgrade digital capabilities are anticipated to have weighed on 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 -0.72%. This is because the Most Accurate Estimate is currently pegged at $2.27 per share, lower than the Zacks Consensus Estimate of $2.29.

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 #4 (Sell).

Stocks to Consider

While an earnings beat looks uncertain for Global Payments, here are some companies from the broader 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:

Palantir Technologies Inc. PLTR has an Earnings ESP of +7.69% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Palantir Technologies’ bottom line for the to-be-reported quarter indicates 100% year-over-year growth. The consensus mark has remained stable over the past week. Furthermore, the consensus mark for PLTR’s revenues indicates a 13.1% increase from a year ago.

Shift4 Payments, Inc. FOUR has an Earnings ESP of +21.25% and a Zacks Rank of 2.

The Zacks Consensus Estimate for Shift4 Payments’ bottom line for the to-be-reported quarter is pegged at 40 cents per share, which suggests a 166.7% year-over-year jump. FOUR beat earnings estimates in all the past four quarters, with an average surprise of 21.5%.

Block, Inc. SQ has an Earnings ESP of +7.75% and a Zacks Rank of 3.

The Zacks Consensus Estimate for Block’s bottom line for the to-be-reported quarter is pegged at 31 cents per share, indicating 72.2% year-over-year growth. SQ beat earnings estimates in two of the past four quarters, met once and missed on the other occasion, with an average surprise of 27.8%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Global Payments Inc. (GPN) : Free Stock Analysis Report

Block, Inc. (SQ) : Free Stock Analysis Report

Shift4 Payments, Inc. (FOUR) : Free Stock Analysis Report

Palantir Technologies Inc. (PLTR) : Free Stock Analysis Report

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