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Global Payments (GPN) Q3 Earnings Beat on Higher Revenues


Global Payments Inc.’s GPN earnings of $1.15 per share beat the Zacks Consensus Estimate of $1.03 and improved 29% year over year. Better-than-expected earnings were primarily due to higher revenues across its markets.

Global payments posted revenues of $930.4 million, which surpassed the Zacks Consensus Estimate of $913 million and grew 12% year over year.

Total operating expense of $866.4 million increased 4.2% year over year thanks to higher cost of service.

Adjusted operating margin improved 110 basis points to 31.3%.

Global Payments Inc. Price, Consensus and EPS Surprise

Global Payments Inc. Price, Consensus and EPS Surprise | Global Payments Inc. Quote

Growth Across Segments

North America: Revenues of $685.8 million increased 10.8% year over year. Operating income of $216.9 million was up 15.2% year over year.

Europe: Revenues of $175.8 million increased 17.2% year over year. Operating income of $83.1 million increased 17.1% year over year.

Asia-Pacific: Revenues of $68.8 million increased 15.3% year over year. Operating income of $22.2 million was up 28.4% year over year.

Strong Financial and Balance Sheet Position

Total cash and cash equivalents as of Sep 30, 2017 were $1.19 billion, up from $1.16 billion as of Dec 31, 2016.

Total long-term debt of $4.68 billion increased from $4.26 billion as of Dec 31, 2016.

The company also approved a quarterly dividend of 1 cent per share payable Dec 29, 2017.

2017 Guidance Raised

Followed by strong earnings performance in the first half, the company raised its 2017 adjusted earnings guidance to a range of $3.94 to $4.02 per share (up from $3.85 to $4.00 guided previously), which reflects growth of 24% to 26% over 2016. Adjusted net revenues are expected between $3.505 billion and $3.53 billion (versus $3.40 billion and $3.48 billion), reflecting an increase of 23% to 24% from 2016.

Business Update

During the quarter, the company completed the acquisition of the communities and sports divisions of ACTIVE Network, providing cloud-based, mission-critical enterprise software solutions to event organizers. This acquisition will be highly complementary to Global Payments’ gaming business and will expand its existing suite of innovative products and solutions.

Our Take

The company’s strong results reflect its effective business execution and growth from acquisitions. We favorably view its investments in enhancing digital capabilities and improving the balance sheet, which will drive long-term growth.

Zacks Rank and Other Performances

Global Payments carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

From the same space, Mastercard Inc. MA, Total System Services Inc. TSS and Alliance Data Systems Corp. ADS beat their respective third-quarter estimates by 8.94%, 8.64% and 6.36%.

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