Global Payments — the Other Payment Processor


Stock (Symbol)

Global Payments (GPN)

Stock Price


Data is as of
November 3, 2016
Expected to Report
Jan 9 – 13
Company Description
globalpayGPN is a provider of payment technology services. The Company provides payment and digital commerce solutions. GPN operates in two segments: North America merchant services and International merchant services. GPN North America merchant services and International merchant services segments primarily provide payment solutions for credit cards, debit cards, electronic payments and check-related services. The Company’s North America merchant services and International merchant services segments target customers in various industries, including financial services, gaming, government, healthcare, professional services, restaurants, retail, universities, not-for-profit organizations and utilities. GPN performs a series of services, including authorization, electronic draft capture, file transfers to facilitate funds settlement and certain exception-based, back office support services, such as chargeback and retrieval resolution. Source: Thomson Financial
Sharek’s Take
David SharekGlobal Payments is the payment processor you probably haven’t heard of. Global Payments was spun off of National Data Corp in 2001 and competes with Bank of America, Chase, Wells Fargo, and First Data among others in providing the technology for merchants to take your payments. In an example purchase, the customer charges $100 at a store, the merchant deals with Global Payments to get the $100 back (minus $2.00 GPN retains). GPN then keeps $0.50 as its net revenue, and sends $1.50 to the member/settlement bank. The company gets around 60% of sales from the US, 20% from Europe, 10 from Canada and 10% from Asia. Global Payments recently acquired Heartland Payment Systems, which works with small and mid-sized merchants as well as education providers. Yesterday it announced an agreement with American Express to do payment processing, settlement, reporting, support and statementing services to small merchants in the UK. This stock has seen its P/E ratio surge from 13 in 2011-2013 to 22 as of last qtr. But for  the past week the stock has sold off as the recent election of Drumpf as our President sent shares of card companies lower. Ok, I’ll take it. GPN is $68 today, down from $71 two weeks ago when these tables & charts were created. The stock is now undervalued at 19x earnings, as its Estimated Long-Term Growth Rate is a robust 23%. Also, profits are expected to climb 12%, 23%, 29% and 20% the next 4 qtrs – nice. I will add GPN to the Growth Portfolio today.
One Year Chart
gpn_2016_q4Profits grew just 9% last qtr on a 52% surge in sales. GPN beat the street by 3 cents but this figure was lowered by 4 cents the qtr before. After the dust settled, analysts increased future estimates a tiny bit. GPN has a May 31st fiscal year end, so that was 2016 Q1 in my book. For 2016 the company is expected to post 18% profit growth, which is good. Estimates for the next 4 qtrs are 12%, 23%, 29% and 20%. With solid figures expected early next year, this stock could trend higher in 2017. GPN has support around this level and resistance at $80 which is 18% higher than today’s quote. I like that.
Fair Value
gpn_2016_q4_phGPN is a rare type of company that can earn a higher valuation from Wall Street over time. In this case analysts value the company more as growth is faster than it used to be. My Fair Value is 23x earnings which is $81 in 2016. Remember in the last paragraph I said the stock has resistance at $80? Well this combination of resistance/Fair Value makes it likely the stock stays in this trading range until maybe the Last Spring when we switch to 2017’s profit estimates.
Bottom Line
gpn_2016_q4_10yrGlobal Payments is now a Wall Street darling after years of being a stock that wasn’t moving. The swift move up made it dangerous for me to buy in, but now GPN has corrected and with it hitting support here at $68 I feel this is the time to take a position. With the stock at $68, there’s high-teens upside to my Fair Value. But with record profits each year the past decade, I like this stock as a long-term buy-and-hold investment. GPN will rank 22nd of 36 stocks in the Growth Portfolio Power Rankings.
Power Rankings
Growth Stock Portfolio

22 of 36

Aggressive Growth Portfolio


Conservative Stock Portfolio


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