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Here's Why You Should Retain Global Payments (GPN) Stock for Now

Global Payments Inc.’s GPN growing payments volume, accretive acquisitions, strong performing Merchant Solutions business and streamlining of business make it worth retaining in one’s portfolio. Also, its favorable growth estimates are confidence boosters for investors.

Zacks Rank & Price Performance

GPN currently carries a Zacks Rank #3 (Hold). In the year-to-date period, the stock has gained 5.8% compared with the industry’s rise of 5.5%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Optimistic Growth Projections

The Zacks Consensus Estimate for GPN’s 2023 earnings is pegged at $10.32, indicating a 10.7% increase from the year-ago reported figure of $9.32. The same for GPN’s 2023 revenues is pegged at $8.6 billion, indicating a 5.8% increase from the year-ago reported figure of $8.1 billion.

Tailwinds

Global Payments is a Fortune 500 leading payments technology company providing software and services to financial institutions across 170 countries. Growing demand for digital payments should aid the company’s revenue growth in the future.

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The company also earns through software subscription and licensing fees. Growth in customer base, accelerating use of digital payments and ongoing recovery from the pandemic should boost growth in future.

GPN has been witnessing growth in revenues over the last few years, banking on improving volumes. Merchant Solutions contributed 69.1% to the total revenues in 2022, and this figure is expected to grow further as transaction fees will boost on the back of volume growth. The company projects adjusted net revenues within $8,575-$8,675 million this year, indicating 6-7% growth from the 2022 reported figure.

The company does not hesitate to boost its global footprint with ambitious acquisitions. It acquired EVO Payments, Inc. in August 2022, a leading payments and services provider offering a plethora of solutions to merchants in the United States and Europe. This acquisition expands GPN’s geographic presence, supplements its business-to-business and most importantly, supports its technology-based payments strategy.

Global Payments divested the consumer portion of its Netspend business, aiming to focus on its core corporate customers. The company also entered into a definitive agreement to sell its gaming business. This highlights the company’s unwavering focus on building up its core operations. These moves should lead to lower expenses and improve the bottom line in future.

GPN focuses on top-tier strategic partnerships to grow its business. It has partnered with Mastercard to improve the dispute resolution process for more than 25 million car owners. The company has also inked a deal with Mondu to serve financial services customers across use cases, like prepaid cards, lending solutions and credit cards.

The company’s financial flexibility enables it to invest in technology, strategic partnerships and return capital to shareholders. GPN exited 2022 with cash and cash equivalents of $1,997.6 million, way above the current portion of long-term debt of $1,169.3 million. It returned more than $3 billion in 2022 via share repurchases and dividends.

An increase in the capacity of the company’s share buyback program was made to bring the total authorization amount to $1.5 billion. Hence, a strong financial position remains an additional tailwind for Global Payments. This should instill confidence in shareholders.

The company has a VGM Score of B.

Key Concerns

However, there are a few factors that have been impeding the stock’s growth lately.

The performance of Consumer Solutions segment is a concern. This segment is delivering poor performance due to reduced consumer spending and volumes.

Rising operating expenses are also harming the company’s margins. Despite cost management efforts, operating expenses rose 16.3% year over year. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.

Stocks to Consider

Some better-ranked stocks from the Financial Transaction Services space are Diebold Nixdorf, Incorporated DBD, International Money Express, Inc. IMXI and Paysafe Limited PSFE. Each of these companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Diebold Nixdorf’s 2024 earnings indicates 60.2% year-over-year growth. The Zacks Consensus Estimate for DBD’s 2023 earnings has moved 18.4% north in the past 60 days.

The Zacks Consensus Estimate for International Money Express’s 2023 earnings indicates 24.3% year-over-year growth. The Zacks Consensus Estimate for IMXI’s 2023 earnings has moved 6.1% north in the past 60 days.

The bottom line of IMXI outpaced the Zacks Consensus Estimate ineach of the last four quarters, the average surprise being 17.1%.

The Zacks Consensus Estimate for Paysafe Limited’s 2024 earnings indicates 107.8% year-over-year growth. The bottom line of PSFE outpaced the Zacks Consensus Estimate inthree of the last four quarters and met in one, the average surprise being 84.3%.

The Zacks Consensus Estimate for PSFE’s 2023 earnings has moved 30.6% north in the past 30 days.

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

Diebold Nixdorf, Incorporated (DBD) : Free Stock Analysis Report

INTERNATIONAL MONEY EXPRESS, INC. (IMXI) : Free Stock Analysis Report

Paysafe Limited (PSFE) : Free Stock Analysis Report

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