Insiders Are Selling Global Payments

Oct.11.13 | About: Global Payments (GPN)

In this article, I will feature one business services company that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Global Payments (NYSE:GPN) provides electronic payments transaction processing services for consumers, merchants, independent sales organizations, financial institutions, government agencies, and multi-national corporations in North America, South America, Europe and the Asia-Pacific region.

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Insider selling during the last 30 days

Here is a table of Global Payments' insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Suellyn Tornay EVP Oct 3-8 33,608 No 29,270 shares 53.4%
Raymond Killian Director Oct 4 15,398 No 10,419 shares 59.6%
Paul Garcia Director Oct 2 154,000 Yes 571,903 shares 21.2%
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There have been 203,006 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Global Payments' insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
October 2013 203,006 0
September 2013 0 0
August 2013 4,860 5,000
July 2013 0 0
June 2013 140,000 0
May 2013 0 0
April 2013 4,400 0
March 2013 0 0
February 2013 0 0
January 2013 13,385 0
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There have been 365,651 shares sold and there have been 5,000 shares purchased by insiders this year. The month of October has seen the most insider selling this year.

Financials

Global Payments reported the fiscal 2014 first-quarter, which ended August 31, financial results on October 1, with the following highlights:

Revenue $629.7 million
Net income $64.6 million
Cash $725.9 million
Debt $1.4 billion
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Outlook

Annual fiscal 2014 GAAP diluted earnings per share is expected to be $3.40 to $3.47. Annual revenue is expected to be $2.51 billion to $2.56 billion, or 6% to 8% growth over fiscal 2013.

Competition

Global Payments' competitors include Vantiv (NYSE:VNTV), Total System Services (NYSE:TSS), and Heartland Payment Systems (NYSE:HPY). Here is a table comparing these companies.

Company HPY VNTV TSS GPN
Market Cap: 1.46B 3.74B 5.60B 4.03B
Employees: 3,002 2,671 8,600 3,954
Qtrly Rev Growth (yoy): 0.06 0.11 0.03 0.07
Revenue: 2.08B 1.98B 1.89B 2.42B
Gross Margin: 0.15 0.56 0.33 0.63
EBITDA: 145.74M 513.04M 430.35M 513.16M
Operating Margin: 0.06 0.17 0.19 0.16
Net Income: 68.31M 108.04M 235.15M 234.09M
EPS: 1.90 0.83 1.25 3.04
P/E: 20.99 33.05 23.65 18.21
PEG (5 yr expected): 1.32 1.00 1.21 1.33
P/S: 0.70 1.85 2.92 1.67
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Global Payments has the second lowest P/S ratio among these four companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
HPY 4,000 385,580
VNTV 0 61,504,516
TSS 0 1,267,441
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Only Global Payments has seen intensive insider selling during the past 30 days.

Conclusion

There have been three different insiders selling Global Payments and there have not been any insiders buying Global Payments during the past 30 days. All three of these insiders decreased their holdings by more than 10%. Global Payments has an insider ownership of 0.80%.

Global Payments is trading at a P/E ratio of 18.21 and a forward P/E ratio of 12.57. Global Payments has a book value of $14.73 per share and the stock has a dividend yield of 0.14%.

Before entering short Global Payments, I would like to get a bearish confirmation from the Point and Figure chart. The main reason for the proposed short entry is the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.