Global Payments ( GPN ) topped fourth-quarter profit forecasts early Wednesday but guided low for this year, after a year of major consolidation for payment stocks.Global Payments stock fell.
Global Payments Earnings Estimates: Wall Street expected Global Payments earnings per share to climb 20% to $1.59, according to Zack’s Investment Research.Revenue was seen soaring 164% to $2.16 billion due to last year’s acquisition of Total System Services for $21.5 billion.
Results: EPS of $1.62 on revenue of $1.99 billion.
Outlook: Full-year EPS of $7.43-$7.62, with the midpoint below consensus for $7.56, on revenue of $8.45 billion-$8.52 billion, below consensus for $9.22 billion.
“We now expect annual run-rate expense synergies of at least $350 million within three years, an increase from our prior expectation of more than $325 million,” said COO Cameron Bready.”Further, we continue to expect annual run-rate revenue synergies of at least $125 million from the merger within that same period.”
Global Payments’ deal to by Total System Services was actually the smallest of last year’s mega deals, which together dramatically changed the landscape for payment stocks.Fidelity National Information Services ( FIS ) bought Worldpay for $43 billion, while Fiserv ( FISV ) acquired First Data for $22 billion.
Global Payments Stock Shares closed down 0.7% at 201.67 on the stock market today .Fidelty stock fell 1.1%, and Fiserv stock dropped 1.3%.Among other payment stocks, Visa ( V ) rose 1.7% and Mastercard ( MA ) added 1%.
Global Payments stock was extended after breaking out of a cup with handle base, MarketSmith analysis shows .The stock has been making progress since mid-December, and is well clear of its 50-day moving average .
The relative strength line for Global Payments stock has also been making progress.
It has a perfect IBD Composite Rating of 99 .While it has been performing well on the stock market, Global Payments earnings performance has been even better.The Stock Checkup Tool shows EPS growth has averaged an impressive 26% over the past three years.This is just above the 25% benchmark set by the CAN SLIM system.
Analyst Bullish On Global Payments Stock Deutsche Bank analyst Bryan Keane was rating Global Payments stock as a buy with a 230 target heading into earnings.
He thinks the company is well positioned to deliver revenue growth of around 9% to 11%, excluding the legacy GPN North America Wholesale business .
“In addition we believe the company is well positioned to continue expanding operating margins from mix shift into higher value services, such as tech-enabled software solutions, as well as strong operating leverage and significant cost synergies primarily across the Merchant Solutions segment,” he said in a Jan.26 research note.
“Furthermore, we believe the combined company with low pro-forma leverage of around 2.5x and strong free cash flow generation is well positioned for further acquisitions to bolster growth and the software strategy as well as share repurchases.”
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