Global Payments Grows Faster than Visa and MasterCard

Stock (Symbol)

Global Payments (GPN)

Stock Price


Data is as of
January 30, 2017
Expected to Report
Apr 4 – 10
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 growing faster than MasterCard & Visa — and is less expensive as well. Global Payments provides 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. GPN was spun off of National Data Corp in 2001 and competes with Bank of America, Chase, Wells Fargo, and First Data. Global Payments gets 74% of sales from North America, 18% from Europe, and 8% from Asia. It recently acquired Heartland Payment Systems, which works with small and mid-sized merchants as well as education providers. Global Payments has been growing profits faster than Visa and MasterCard, yet GPN has a P/E of just 20 compared to 24 for the other two. My fiscal 2017 Fair Value (year ending May 31, 2018) is $92 a share, an 18% premium to the recent quote. 
One Year Chart
Last qtr the company delivered 17% profit growth on 30% sales growth which were boosted by Heartland. Profits beat expectations of 12% growth and the stock tried to break out on the news (but didn’t). Thomson Financial doesn’t have correct data for GPN. It has the fiscal year end December 31st, but the company has a fiscal year end May 31st, so there may be discrepancies here. First, GPN just upped fiscal 2017 profits to $3.70-$3.90. But Thomson has $3.56 — which is what I get when I add up the 4 qtrs. This 20 P/E is on GPN’s estimates. Qtrly profit Estimates are 24%, 29%, 19%, 16% which are quite solid. This Est. LTG just fell from 23% to 12% this qtr, which is strange (incorrect?) as the company is growing around 20%.
Fair Value
Like the other credit card companies, Global Payments has has grown profits each year during the last decade. My Fair Value on this stock is 22x earnings.
Bottom Line
Global Payments is a faster growing company than Visa and MasterCard but trades at a lower valuation. In the end, I like all three stocks, but this stock has the best growth opportunity in my opinion. Plus with profits expected to climb 24% and 29% the next 2 qtrs, this stock could go on a run higher. GPN ranks 21st of 34 stocks in the Growth Portfolio Power Rankings.
Power Rankings
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21 of 34

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