Global Payments (GPN) to Post Q2 Earnings: A Beat in Store?

Global Payments Inc. GPN is slated to report second-quarter 2020 results on Aug 3, before market open.

In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 4.2% and also grew 18% year over year.

Factors Likely to Impact Q2 Results

Starting mid-March, the COVID-19 pandemic began to affect the company’s results significantly in North America and Europe as governments took actions to encourage social distancing and implement shelter-in-place directives. The deterioration in the company’s financial results accelerated toward the end of March as the pandemic spread further with the increase in the number of countries and localities adopting restrictive measures.

The company expects the COVID-19 outbreak to adversely impact its revenues and the financial numbers for the remainder of 2020.

The company already took some cost-saving actions. In fact, strategic moves, such as reductions in employee compensation costs, business travel and marketing initiatives might have helped mitigate the COVID-19 negativity on the company’s financials.

In the Merchant Solutions segment, the company is likely to have seen additional revenues from the acquired operations of Total Systems. As revenues from the Merchant Solutions segment are predominantly generated from core merchant acquiring, the company experienced significant revenue declines beginning the middle of March due to a slowdown in consumer spending and closures of certain merchant customer businesses including those which run restaurants, retail locations, schools and universities and casinos. This apart, the cancellation of events involving large groups of people throughout North America and Europe was a dampener Thus, the segment’s revenues are likely to have been drained in the to-be-reported quarter.

In its Issuer Solutions segment, the company is also expected to have experienced revenue declines as a result of lower transaction volumes, particularly in its commercial cards due to softness in travel and entertainment spending.

Further, the company’s Business and Consumer Solutions segment is likely to have witnessed weak revenues, thanks to decreased consumer spending, a decline in load activity and fewer new funded accounts.
Additionally, operating expenses might have risen due to higher acquisition and integration expenses.

Q2 Earnings and Revenue Estimates

The Zacks Consensus Estimate for the company’s earnings per share is pegged at $1.14, indicating a decrease of 24.5% from the year-ago quarter’s reported figure. The consensus mark for revenues stands at $1.41 billion, suggesting 26.4% growth from the year-earlier quarter’s reported number.

Earnings Surprise History

The company’s bottom line surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 2.92%.

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

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

What Our Quantitative Model Predicts

Our proven model predicts 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 odds of an earnings beat.

Earnings ESP: Global Payments has an Earnings ESP of +11.48%. 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 #3, currently.

Other Stocks to Consider

Some other stocks worth considering from the finance sector with the apt combination of elements to also surpass estimates this reporting cycle are as follows:

Fiserv, Inc. FISV has a Zacks Rank of 2 and an Earnings ESP of +3.14%, presently. You can see the complete list of today’s Zacks #1 Rank stocks here.

LendingTree, Inc. TREE has a Zacks Rank #2 and an Earnings ESP of +845.31% at present.

Fidelity National Information Services, Inc. FIS has an Earnings ESP of +4.87% and is a #3 Ranked player, currently.

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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.

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