Global Payments, Inc. (NYSE:GPN) reported solid earnings for the final quarter of fiscal 2014 ended May 31, 2014 (SEC filing, conference call). Fiscal fourth quarter revenues grew 9% Y/Y to $674.0M. Cash diluted EPS grew 11% to $1.09. GAAP diluted EPS reached $0.72, up 35% Y/Y. For the full fiscal year 2014, revenues grew 8% to $2.55B. Cash diluted EPS grew 13% to $4.12 and GAAP EPS reached $3.37, up 22%. During fiscal 2014, GPN returned over $450M to shareholders and completed a $420M acquisition. GPN achieved several strategic goals, such as further expanding in the U.S., delivering solid performance in Canada and expanding in Asia.
For the full fiscal 2015 GPN expects annual revenue of $2.69B to $2.76B, or 6% to 8% growth over fiscal 2014. Cash EPS is expected in the range of $4.52 to $4.62, reflecting growth of 10% to 12% over fiscal 2014. GAAP diluted earnings per share is expected to be $3.76 to $3.86, or 11.5% to 14.5% over fiscal 2014. The FY2015 guidance beat mid-point consensus estimates on sales and was in line on the EPS expectations. GPN is also expanding its current share repurchase authorization by an incremental $200M, or 4% of shares outstanding. In fiscal 2015, GPN will continue to focus on its direct distribution strategy by leveraging its global technology platforms to deliver new, innovative products and services, driving operating margin expansion and delivering double-digit cash earnings per share growth.
Due to continued strong growth and solid earnings, I remain long-term very bullish on Global Payments. The price target of my original thesis soon proved to be too conservative as GPN beat expectations. I had to raise my target price and update my thesis. The strength expected by my thesis materialized and I am now happy to affirm my buy recommendation. The stock is up ~50% in less than a year since my original thesis, but I am still raising my target price to ~$80 per share on strong quarterly results, a larger buyback program and strong FY2015 guidance. GPN now offers a roughly 12% upside within 12 months and another 10% to 15% per year afterwards.
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