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

Global Payments Inc. GPN has been gaining momentum on the back of several growth-related initiatives like buyouts and partnerships. Such moves are expanding its global presence. Continuous technology investments and strong financial standing also reinforce the stock’s growth prospects.

Zacks Rank & Price Performance

Presently, Global Payments carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has gained 9.4% over a year compared with the industry’s growth of 14.2%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Style Score

The company has an impressive Growth Score of B, which reinstates the growth prospects of a company.

Impressive Earnings Surprise History

Global Payments boasts an impressive earnings surprise record. It has surpassed estimates in each of the last four quarters. The company has a trailing four-quarter earnings surprise of 5.77%, on average.

Positive Estimate Revision

The Zacks Consensus Estimate for 2021 earnings has been revised upward by 0.9% in the past 60 days.

Solid 2021 Guidance

Concurrent with first-quarter 2021 results, Global Payments raised its 2021 business outlook. Adjusted net revenues are now forecast in the range of $7.55 billion to $7.625 billion, higher than the prior guidance of $7.50-$7.60 billion. The newly-provided guidance indicates growth of 12-13%% from the 2020 reported figure.

Adjusted earnings per share is anticipated to be $7.87-$8.07, up from the previous guidance of $7.75-$8.05. The revised guidance suggests 23-26% growth from 2020-end reported figure.

Business Tailwinds

The leading payments technology company has an impressive inorganic growth story. Time and again, Global Payments has resorted to acquisitions and collaborations, which in turn provided a boost to its software-driven and technology-enabled strategy. In fact, addition of Total System Services (TSYS) in 2019 has not only empowered Global Payments with the much-needed scale but also bolstered its presence in several new markets. The company inked a deal to acquire the real estate technology company Zeto in May 2021 to expand its real estate industry footprint.

Moreover, it has undertaken prudent cost-control measures, which have been driving its margins. The company has been benefiting from synergies obtained from the TSYS merger. It continues to anticipate annual run rate revenue synergies of a minimum of $150 million and annual run rate expense synergies of at least $400 million by September 2022, which marks the third year of closing of TSYS merger.

Global Payments has made consistent investments in technology in a bid to capitalize on the current prospects in the digital payments space. Its collaboration with Google Cloud in 2021 further highlights its efforts to boost digital offerings.

Furthermore, the company boasts of a solid cash balance, which, as of Mar 31, 2021, increased 7% from the 2020-end level. The company’s solid cash generation abilities have helped it to pursue several growth-related efforts. Its leverage ratio has been improving, which came in at 26.5x at first-quarter end and remained lower than the industry’s figure of 37.7x.

Stocks to Consider

Some better-ranked stocks in the business services space include Equifax Inc. EFX, EVERTEC, Inc. EVTC and Avis Budget Group, Inc. CAR, each carrying a Zacks Rank #2 (Buy).

Equifax, EVERTEC and Avis Budget Group have a trailing four-quarter earnings surprise of 19.30%, 23.90% and 85.86%, on average, respectively.

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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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