A month has gone by since the las t earnings report for Global Payments (GPN). Shares have added about 8.9% in that time frame, outperforming 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 recen t earnings report in order to get a better handle on the important catalysts.
Global Payments' Q4 Earnings Top Estimates, Rise Y/Y
Global Payments Inc. came up with fourth-quarter 2018 adjusted earnings of $1.33 per share, beating the Zacks Consensus Estimate by 0.8% and also improving 24.3% year over year.
The reported quarter benefited both from the company's higher revenues and decreased expenses.
Behind the Headlines
Adjusted net revenues plus network fees were $1.04 billion, up 13% year over year. The top line also marginally surpassed the Zacks Consensus Estimate by 0.1%, mainly driven by segmental performances.
Total operating expense of $713.6 million decreased 21.2% year over year, led by a lower cost of services.
Adjusted operating margin expanded 80 basis points to 31.6%.
Growth Across Segments
North America: Adjusted net revenues plus network fees of $765 million increased 13.9% year over year. Operating income of $247 million was up 20% year over year.
Europe: Adjusted net revenues plus network fees of $188 million grew 7.7% year over year. Operating income of $89.6 million rose 7.6% year over year.
Asia-Pacific: Adjusted net revenues plus network fees of $84.7 million climbed 9.5% year over year. Operating income of $29 million improved 10.7% year over year.
Share Repurchase and Dividend Update
Global Payments' board of directors has approved a dividend of 1 cent per share, payable Mar 29, 2019 to shareholders of record as of Mar 15, 2019.
The company ramped up its share repurchase program to $750 million.
Balance Sheet Position
Total cash and cash equivalents as of Dec 31, 2018 were $1.2 billion, down 9.4% from $1.3 billion as of Dec 31, 2017.
Long-term debt as of Dec 31, 2018 was $5 billion, up 10% from the level at 2017 end.
Net cash provided by operating activities for 2018 was $1.1 billion, up 116% year over year.
For 2018, adjusted revenues plus network fees increased 15% to $3.97 billion. Adjusted earnings per share grew $5.19, up 29% year over year.
For 2019, the company expects adjusted net revenues plus network fees in the band of $4.43-$4.49 billion. Adjusted EPS is projected in the range of $5.90-$6.10.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
At this time, Global Payments has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. It comes with little surprise Global Payments has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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