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Global Payments (GPN) Q1 Earnings to Grow on Higher Revenues

Global Payments Inc.GPN first-quarter earnings scheduled for May 3, 2018, should reflect revenue and earnings growth.

The company has witnessed revenue growth for the past several quarters and the trend is expected to continue in the to-be-reported quarter, led by accretion from the merger with Heartland Payments, other alliances and joint ventures. Moreover, there is ever-increasing demand for electronic payment transactions, which provide the company abundant scope for top-line growth.

Region-wise, the United States should show higher revenues led by its direct distribution business, partly offset by a decline in the wholesale business. Europe should benefit from favorable currency movements and synergies from the Erste joint venture. Penetration in the pan-European markets should lead to growth in the e-commerce and omni-solution business. Asia Pacific business should show strong revenues from Philippians, Singapore, Taiwan, and China led by Ezidebit and eWAY, payment solutions platform.

We expect revenue accretion from the company's acquisition of the communities and sports divisions of ACTIVE Network, in third quarter of 2017. This acquisition is highly complementary to Global Payments' gaming business and will expand its existing suite of innovative products and solutions.

A reduction in tax rate in the range of 22% to 23%, down from approximately 26.5% in 2017, should aid margins.

We expect the company to have used its cash to pay down debt, which will result in the reduction of leverage ratio, which was at 3.6 times at the end of Dec 31, 2017.

Earnings Surprise History

The company boasts an attractive earnings surprise history. It beat estimates in each of the last four reported quarters, with an average positive surprise of 4%. This is depicted in the chart below:

Global Payments Inc. Price and EPS Surprise

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

Here is what our quantitative model predicts:

Our proven model does not conclusively show that Global Payments is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1, 2 or 3 for this to happen. But that is not the case here as you will see below.

Zacks ESP: Global Payments has an Earning ESP of -0.98%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Global Payments carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

FleetCor Technologies, Inc. FLT is expected to report first-quarter 2018 earnings results on May 3. The company has an Earnings ESP of +0.79% and a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

WEX Inc. WEX has an Earnings ESP of +0.44% and a Zacks Rank #2. The company is expected to report first-quarter earnings results on May 3.

Cardtronics Plc CATM is expected to report first-quarter 2018 earnings results on May 3. The company has an Earnings ESP of +10.00% and a Zacks Rank #2.

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Cardtronics PLC (CATM): Free Stock Analysis Report

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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