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Global Payments Inc. (GPN)
NYSE:GPN
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Global Payments
(NYSE:GPN)73Outperform
Positive Factors
Growth Initiatives
The launch of Genius for SMB restaurant and retail verticals in the US, with plans for international expansion, indicates growth potential.
Valuation
The stock is considered attractive at ~9X 2025E EPS, with improved quality of earnings and generally in-line results.
Negative Factors
Earnings Performance
GPN's 4Q was largely disappointing, and the stock traded down -4% vs. SPX +1%.
Global Payments (GPN) vs. S&P 500 (SPY)
Market Cap
$25.52B
Dividend Yield0.97%
Average Volume (3M)1.93M
Price to Earnings (P/E)16.7
Beta (1Y)0.92
Revenue Growth4.68%
EPS Growth63.39%
CountryUS
Employees27,000
SectorIndustrials
Sector Strength66
IndustryCorporate Services
Share Statistics
EPS (TTM)6.17
Shares Outstanding247,616,180
10 Day Avg. Volume2,171,956
30 Day Avg. Volume1,927,925
Financial Highlights & Ratios
PEG Ratio0.26
Price to Book (P/B)N/A
Price to Sales (P/S)2.52
Price to Cash Flow (P/CF)9.80
P/FCF Ratio10.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$131.53Price Target Upside32.14% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering19
Global Payments Business Overview & Revenue Model
Company DescriptionGeorgia-based Global Payments, Inc. provides payment technology and software solutions for card, electronic, check, and digital-based payments in North America, Europe, the Asia-Pacific, and Latin America. The company operates through the following segments: Merchant Solutions, Issuer Solutions and Business & Consumer Solutions.
How the Company Makes MoneyGlobal Payments Inc. generates revenue primarily through transaction fees charged to merchants for processing payments. This includes fees from credit and debit card transactions, as well as other electronic payment methods. The company also earns money from software solutions and value-added services designed to enhance the payment experience for merchants and consumers. Key revenue streams include merchant services, which involve acquiring and processing payments for businesses, and technology services, where Global Payments provides integrated payment solutions to partners and clients. Additionally, Global Payments forms strategic partnerships with financial institutions and technology companies to expand its reach and enhance its service offerings, contributing significantly to its earnings.
Global Payments Financial Statement Overview
Summary
Global Payments exhibits robust financial health with notable revenue and profit growth, a stable balance sheet, and strong cash flow generation. The company effectively managed its growth trajectory, as seen in the increasing revenue and net income over the years. While the leverage has increased, it remains within manageable levels, supported by strong equity. The cash flow metrics showcase effective cash management, enhancing the company's ability to invest and return value to shareholders. Overall, the financial statements reflect a well-managed company with solid growth prospects in the corporate services industry.Income Statement
Global Payments has demonstrated strong revenue growth with a consistent increase in total revenue over the years, from $4.91 billion in 2019 to $10.11 billion in 2024. The gross profit margin remained robust at 100% in 2024 due to equal gross profit and revenue, although this is anomalous. Net profit margin improved to 15.54% in 2024 from 8.76% in 2023. EBIT and EBITDA margins also indicate solid operational efficiency, with EBIT margin at 23.10% and EBITDA margin at 23.10% in 2024, showing consistent growth. However, the decline in gross profit margin from previous years might indicate potential cost management issues.85
Very Positive
Balance Sheet
The company's balance sheet shows a stable financial position with an improving equity base, with stockholders' equity increasing from $27.83 billion in 2019 to $22.28 billion in 2024. The debt-to-equity ratio was 0.73 in 2024, indicating moderate leverage, though it has increased compared to earlier years. The return on equity improved significantly to 7.05% in 2024 from 4.29% in 2023, reflecting better profitability and efficient use of equity. The equity ratio was 47.49% in 2024, indicating a balanced capital structure, though slightly lower than previous years.75
Positive
Cash Flow
Operating cash flow increased to $3.53 billion in 2024 from $2.25 billion in 2023, showing strong cash generation capabilities. The free cash flow grew to $2.86 billion in 2024, a significant increase from $1.59 billion in 2023, reflecting improved liquidity. The operating cash flow to net income ratio was 2.25 in 2024, indicating strong cash flow relative to net income. Free cash flow to net income ratio also improved, supporting sustainable cash dividends and potential reinvestment. Overall, the company's cash flow position is strong, supporting its growth and operational needs.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 10.11B | 9.65B | 8.98B | 8.52B | 7.42B | Gross Profit |
| 6.35B | 5.93B | 5.20B | 4.75B | 3.77B | EBIT |
| 2.33B | 1.72B | 640.15M | 1.36B | 893.95M | EBITDA |
| 4.37B | 3.61B | 2.43B | 3.23B | 2.51B | Net Income Common Stockholders |
| 1.57B | 986.23M | 111.49M | 965.46M | 584.52M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.54B | 2.09B | 2.00B | 1.98B | 1.95B | Total Assets |
| 46.89B | 50.57B | 44.81B | 45.28B | 44.20B | Total Debt |
| 16.24B | 17.38B | 14.29B | 12.08B | 9.76B | Net Debt |
| 13.70B | 15.29B | 12.29B | 10.10B | 7.81B | Total Liabilities |
| 23.87B | 26.78B | 22.27B | 19.41B | 16.71B | Stockholders Equity |
| 22.28B | 23.00B | 22.30B | 25.63B | 27.33B |
| Cash Flow | Free Cash Flow | |||
| 2.86B | 1.59B | 1.63B | 2.29B | 1.88B | Operating Cash Flow |
| 3.53B | 2.25B | 2.24B | 2.78B | 2.31B | Investing Cash Flow |
| -173.89M | -4.36B | -675.54M | -2.29B | -438.34M | Financing Cash Flow |
| -2.77B | 2.14B | -1.38B | -405.37M | -1.55B |
Global Payments Technical Analysis
Negative
99.54
Price Trends
108.76
Negative
109.26
Negative
105.48
Negative
Market Momentum
-2.14
Positive
34.23
Neutral
37.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GPN, the sentiment is Negative. The current price of 99.54 is below the 20-day moving average (MA) of 106.01, below the 50-day MA of 108.76, and below the 200-day MA of 105.48, indicating a bearish trend. The MACD of -2.14 indicates Positive momentum. The RSI at 34.23 is Neutral, neither overbought nor oversold. The STOCH value of 37.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GPN.
Global Payments Risk Analysis
Global Payments disclosed 37 risk factors in its most recent earnings report. Global Payments reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Global Payments Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $12.61B | 24.70 | 31.85% | 0.68% | 11.19% | 51.03% | |
77 Outperform | $127.53B | 32.70 | 77.46% | 1.80% | 7.09% | 11.51% | |
74 Outperform | $36.82B | 13.06 | 13.62% | ― | 10.06% | 38060.98% | |
73 Outperform | $25.52B | 16.72 | 7.05% | 0.97% | 4.68% | 63.39% | |
70 Outperform | $3.66B | 3.95 | 96.42% | 8.75% | -3.38% | 63.33% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
51 Neutral | $37.02B | 49.29 | 2397.44% | 1.99% | -17.38% | ― |
* Industrials Sector Average
Performance Comparison
GPN
Global Payments
99.54
-28.14
-22.04%
ADP
Automatic Data Processing
313.44
74.68
31.28%
FIS
Fidelity National Info
69.89
1.41
2.06%
WU
Western Union
10.64
-2.06
-16.22%
PAYC
Paycom
217.21
44.37
25.67%
XYZ
Block
59.43
-15.00
-20.15%
Global Payments Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -8.54% | Next Earnings Date: May 5, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance in 2024 with significant growth in the Merchant and Issuer segments, alongside successful partnerships and expansion in various verticals. However, challenges such as dispositions, FX headwinds, and softer trends in certain areas were noted. The sentiment remains positive due to the company's effective execution of its operational transformation and strategic initiatives.Highlights
Strong Financial Performance in 2024
Global Payments delivered 6% adjusted net revenue growth, record adjusted operating margins, and double-digit adjusted earnings per share growth. The company generated roughly $3 billion of adjusted free cash flow and returned $1.8 billion to shareholders.
Merchant Segment Success
The Merchant segment achieved over 7% growth in Q4, driven by strong results in POS and software businesses, with a 25% increase in annual recurring revenue opportunity in North America.
New Partnerships and Expansions
Global Payments expanded its relationship with major clients like Whataburger and a multinational QSR, and added significant new clients in the education and real estate verticals.
Issuer Solutions Growth
The Issuer Solutions business ended the year with record traditional accounts on file of 885 million and a strong pipeline of more than 70 million accounts for future conversion.
Operational Transformation Progress
The company increased its operational transformation target from over $500 million to more than $600 million in annual run rate operating income benefit by the first half of 2027.
Lowlights
Impact of Dispositions and FX Headwinds
Dispositions and foreign exchange headwinds presented challenges, with a 175 basis point headwind expected for adjusted net revenue and adjusted earnings per share in 2025.
Softer Trends in Commercial Card and Paycard
The Issuer Solutions business noted softer trends in commercial card volumes and Paycard business due to macroeconomic factors affecting corporate spending and hiring.
Exiting Subscale Markets
Global Payments is exiting several small markets in Asia Pacific where it is subscale, impacting adjusted net revenue by over 300 basis points.
Company Guidance
During the fourth quarter and full year 2024 earnings call, Global Payments provided guidance for fiscal year 2025, projecting constant currency adjusted net revenue growth of 5% to 6%, excluding dispositions. The company anticipates adjusted operating margin expansion of approximately 50 basis points, also excluding dispositions. They aim for adjusted earnings per share growth of 10% to 11% on a constant currency basis, despite a 175 basis point headwind from currency fluctuations. The Merchant Solutions segment is expected to deliver around 6% constant currency revenue growth, while the Issuer Solutions segment is forecasted to grow at approximately 4%. The company plans to invest around $780 million in capital expenditures, representing about 8% of revenue, and anticipates a greater than 90% conversion rate of adjusted net income to adjusted free cash flow. Global Payments also intends to return approximately $2 billion to shareholders during the year, in line with their strategic focus on simplifying operations and enhancing shareholder returns.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.