Global Payments Inc. GPN benefits on the back of higher transaction volumes, strong segmental contribution, buyouts and collaborations, coupled with a strong financial stand.

GPN’s Zacks Rank & Price Rally

Global Payments currently carries a Zacks Rank #3 (Hold).

The stock has gained 21% in the past six months compared with the industry’s 19% growth.

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Global Payments’ Robust Growth Prospects

The Zacks Consensus Estimate for Global Payments’ 2024 earnings is pegged at $11.57 per share, indicating a year-over-year improvement of 11%. The consensus mark for revenues is pegged at $9.2 billion, implying a year-over-year increase of 6.1%.

The consensus estimate for 2025 earnings is pegged at $12.80 per share, indicating an increase of 10.6% from the 2024 estimate. The consensus estimate for 2025 revenues is pegged at $9.6 billion, implying 4.4% growth from the 2024 estimate.

GPN’s Decent Earnings Surprise History

The bottom line of Global Payments outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 0.32%.

Global Payments’ Business Tailwinds

Strong contributions from the Merchant Solutions and Issuer Solutions segments have been key drivers of revenue growth for Global Payments. These segments reported year-over-year revenue increases of 8.8% and 3.9%, respectively, during the first nine months of 2024. Both units continue to benefit on the back of increased transaction volumes. 

Global Payments is aiming for adjusted net revenue growth, excluding dispositions, in the mid-single-digit percentage range for 2025. The company anticipates revenue growth of mid-to-high single digits during the 2026-2027 period.

GPN continues to expand its capabilities and market presence through acquisitions, partnerships and joint ventures. Acquisitions remain a strategic priority for management to enhance business scale and access new markets. Partnerships with CaixaBank and Virgin Money were aimed at bolstering digital payment services.

The company has invested significantly in technology, focusing on product innovation and transitioning its technology platforms to cloud environments. These efforts aim to improve platform performance, diversify its portfolio of cloud-based solutions and achieve cost efficiencies. To streamline its focus on core operations, the company has divested non-core assets. 

Global Payments boasts a solid financial position, supported by a strong cash balance and robust cash flow generation abilities. Operating cash flows totaled $2.9 billion in the first nine months of 2024, reflecting a nearly 81% surge from the prior-year comparable period. This financial strength enables the company to invest in business growth, develop advanced technologies and maintain a competitive edge. Furthermore, management demonstrates a commitment to shareholder returns through share repurchases and regular dividend payments.

GPN’s Key Risks

Global Payments faces challenges from rising operating expenses, which inched up 1.5% year over year in the first nine months of 2024. Additionally, intensified competition in the payment market from emerging firms threatens profitability and pricing dynamics.

Stocks to Consider

Some better-ranked stocks in the Business Services space are AppLovin Corporation APP, ICF International, Inc. ICFI and Huron Consulting Group Inc. HURN. While AppLovin currently sports a Zacks Rank #1 (Strong Buy), ICF International and Huron Consulting carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

AppLovin’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 27.18%. The Zacks Consensus Estimate for APP’s 2024 earnings is pegged at $4.06 per share, which indicates a more than four-fold increase from the 2023 figure. The consensus mark for revenues indicates a 39.9% rise from the 2023 figure. The consensus mark for APP’s 2024 earnings has moved 11.2% north in the past 30 days.

The bottom line of ICF International beat estimates in each of the trailing four quarters, the average surprise being 13.56%. The Zacks Consensus Estimate for ICFI’s 2024 earnings implies an improvement of 13.1% from the 2023 figure. The consensus mark for revenues suggests implies of 2.8% from the 2023 figure. The consensus mark for ICFI’s 2024 earnings has moved 1.7% north in the past 30 days.

Huron Consulting’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.09%. The Zacks Consensus Estimate for HURN’s 2024 earnings indicates an improvement of 23% from the 2023 figure. The consensus mark for revenues indicates a 8.6% rise from the 2023 figure. The consensus mark for HURN’s 2024 earnings has moved 1.5% north in the past 60 days.

Shares of AppLovin and Huron Consulting have gained 323.8% and 24.6%, respectively, in the past six months. However, ICF International stock has lost 9.6% in the same time frame.

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