Seeking Alpha
Profile| Send Message|
( followers)  

About Global Payments: Global Payments Inc. (GPN) is a provider of electronic payments transaction processing services for consumers, merchants, independent sales organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, the United Kingdom, Spain, the Asia-Pacific region, the Czech Republic, and the Russian Federation.

The company serves as an intermediary to facilitate electronic payment transactions and operates in two business segments: North America Merchant Services and International Merchant Services. On December 5, 2011, the company acquired the merchant acquiring business of Alfa-Bank. On December 30, 2011, the company acquired a merchant acquiring business in Malta from HSBC Malta. On January 31, 2012, it acquired the United States merchant portfolio of CyberSource from Visa.

The Fundamentals:

Global just reported revenue of $578.7 million and a profit of $204.8 million for the quarter. Earnings per share were $0.87 and the company just reaffirmed its guidance of $2.36 - $2.4 billion in revenue for the year. It also expects to record a profit of $3.64 to $3.71 per share.

Even if earnings come in near the low end of the range, the forward price-to-earnings ratio is an incredibly low 12.2x. That is compared to a peer group which stacks up as follows:

  • MasterCard (MA) trades at price-to-earnings of 24.3
  • Visa (V) trades at price-to-earnings of 75.34
  • NetSpend (NTSP) trades at price-to-earnings of 68.43
  • American Express (AXP) trades at price-to-earnings of 17.11

There are many other companies in the financial services sector trading at higher P/E multiples that would suggest it is cheap by comparison.

The growth prospects for Global look good. The company showed revenue gains in almost all the markets in which it does business. Strong revenue growth coupled with a strong cash and equivalent position of over $9.40/share makes it a safe bet.

The Institutions:

The big boys are heavy in owning slightly over 98% of the 72.72 million shares outstanding. With nothing negative happening over at Global, I would expect this number to stay the same or climb over the year as Global's results are realized.

Big firms covering Global Payments, Inc. Such as JP Morgan Chase (JPM) just reaffirmed their over weight rating and set a $56 price target. Goldman Sachs (GS) reiterated a buy rating with a $55 price target. Both came in just two days ago on the 3rd of April, and should they be accurate, they represent a substantial 25-28% upside in the stock. Credit Suisse (CS), UBS AG (UBS) and RBC Capital (RBC) all have high $56-58 dollar price targets as well.

Recent trading:

Global payments reported a strong quarter but missed by a penny from the consensus analyst estimate of $0.88/share. Despite showing strong growth, the street overreacted and dumped the shares off ten percent on Wednesday. This created a great opportunity for new investors to take advantage of the dip. This is a very strong company with a great track record and one poised for more growth. I am bullish and taking a long position in the stock.

Source: Pay Attention To Get Paid With Global Payments, Inc.