Riding on a steady growth momentum, shares of
Global Payments Inc.
) hit a new 52-week high of $68.45 on Jan 9. This financial
transaction service provider's shares have escalated 45.5% since
the beginning of 2013.
Moreover, shares of Global Payments increased about 4.1% as
the company reported its second-quarter of fiscal 2014 results
after the closing bell on Jan 8, with a positive earnings
surprise of 4.9%. The encouraging momentum of this Zacks Rank #2
(Buy) stock is fuelled by improved core growth coupled with a
strong operating leverage.
Yesterday's closing price represents a robust one-year return
of about 42% against a return of 25.3% clocked by the S&P 500
index. Average volume of shares traded over the last three months
stands at approximately 748.8K.
On Jan 8, Global Payments reported second-quarter (ended Nov
2013) operating earnings per share of $1.07, which noticeably
exceeded the Zacks Consensus Estimate of $1.02 and the year-ago
quarter number of 93 cents.
Results reflected year-over-year top-line growth of 7.7%
driven by improved merchant service revenues across North America
and international regions. However, growth was partially offset
by 8.3% rise in core operating expenses, although operating
income rose 5.5%. Consequently, operating cash flow surged about
230% over the prior-year period to $411.7 million.
Overall, Global Payments is focusing on strengthening its
roots globally through strategic alliances, technology upgrades
and a dynamic business mix. Although high debt levels raise
balance sheet risks, increased cash position and improving
operating cash flow bode well for future business prospects of
The raised earnings outlook for fiscal 2014, which estimates
10-12% growth over fiscal 2013 along with consistent return of
excess capital further boosts investors' confidence in the
Further, valuation looks reasonable for Global Payments. Both
on forward price-to-earnings and price-to-book basis, the shares
are trading at a discount of about 16% and 17%, respectively, to
the peer group average. However, return on equity of 23.4% and
return on assets of 9.1% stood modestly higher than the peer
group average. Estimated long-term earnings growth is pegged at
10.7%, which is lower than the peer group average of 13.5%.
Some better-ranked financial stocks that warrant a look are
American Express Co.
Alliance Data Systems Corp.
). All these stocks carry the same Zacks Rank as Global
ALLIANCE DATA (ADS): Free Stock Analysis
AMER EXPRESS CO (AXP): Free Stock Analysis
FISERV INC (FISV): Free Stock Analysis Report
GLOBAL PAYMENTS (GPN): Free Stock Analysis
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