Will Global Payments (GPN) Sustain Its Earnings Streak in Q2?

Global Payments Inc.  GPN is slated to report second-quarter 2021 results on Aug 2, before market open.

Q2 Earnings and Revenue Estimates

The Zacks Consensus Estimate for the company’s earnings per share is pegged at $1.82, indicating a 2.82% increase from the year-ago quarter’s reported figure. The consensus mark for revenues stands at $1.85 billion, suggesting a 21.8% rise from the year-earlier quarter’s reported number.

Factors to Note

Revenues of Global Payments’ biggest operating segment, which is Merchant solutions (accounting for 63% of the company’s top line), are likely to have grown as a result of higher spending. The company suffered a revenue decline last year as the COVID-19 pandemic suppressed card and payments activity among thousands of the company's small merchant clients. The situation improved this year and first quarter results already reflected the same with revenues of the segment surging 4.4%.

The company’s Issuer Solutions business is likely to have been weighed down by weakness in commercial card business. Corporate travel, which also contributes to its top line, might have remained stressed throughout 2021. Further, the segment will be absorbing the impact of a portfolio sale by one of its customers, which will affect it for the remainder of the year. Taking these two items into account, the company is forecasting its Issuing business to deliver adjusted net revenue growth in the low single-digit range for 2021. In the first quarter, revenues for the segment declined 0.6% year over year.

The company is likely to show higher profitability in its upcoming results as a result of two primary factors. These are cost-cutting efforts and the realization of expense synergies from its $21.5-billion mega merger with the card issuer Total System Services.

Developments During the June Quarter

Global Payments acquired Zego. It is a digital omni-channel solutions platform that provides a wide range of property management situations ranging from leasing to both one-time and recurring payments, utilities management, resident communications and renewals. The deal will lend the company an instant presence in the wide real estate with $6.5 billion of target addressable market.

The company also announced that it will acquire Worldline’s PAYONE  business in Austria consisting of roughly 8,000 small and medium-sized businesses merchant customers in Erste banks home market. The deal will provide the company with access to the payments market in Austria.

Earnings Surprise History

The company has an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average being 5.8%. This is depicted in the chart below:

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, which is just the case here.

Earnings ESP: Global Payments has an Earnings ESP of +2.31%. 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 #2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

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

Mastercard Inc.  MA has an Earnings ESP of +0.22% and is presently a #3 Ranked player.

Visa Inc.  V has an Earnings ESP of +3.20% and a Zacks Rank of 2 at present.

EVO Payments, Inc.  EVOP has a Zacks Rank of 2 at present and an Earnings ESP of +12.71%.


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Mastercard Incorporated (MA): Free Stock Analysis Report

Visa Inc. (V): Free Stock Analysis Report

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

EVO Payments, Inc. (EVOP): 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.

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