Is Global Payments a Smart Fintech Stock to Buy?

NYSE: GPN | Global Payments Inc. News, Ratings, and Charts

GPN – Fortune 500 fintech company Global Payments (GPN) has been benefiting from changing payment technology trends. The company reported its best quarterly performance in its fiscal year 2021 fourth quarter, ended December 31. However, given dizzying market volatility amid worsening geopolitical tensions, will GPN be able to sustain its growth trajectory in the near term? Read more to learn our view.

Global Payments Inc. (GPN) in Atlanta, Ga., is a Fortune 500 payments technology company that operates in more than 100 countries across the Americas, Europe, and the Asia Pacific. The company operates through three segments: Merchant Solutions; Issuer Solutions; and Business and Consumer Solutions.

Shares of GPN have risen 6.8% in price over the past three months on the back of better-than-expected fiscal 2021 fourth-quarter earnings results and impressive growth prospects. GPN has been rapidly adopting the latest trends to boost its leadership in the fintech industry. Regarding this, GPN CEO Jeffrey Sloan said, “We are right in the nexus’ of the buy now, pay later boom.”

However, the company’s operations are susceptible to macroeconomic headwinds, such as pandemic-fueled operational disruptions and immense competition in the fintech space. Furthermore, given the Fed’s hawkish tilt, GPN’s cost of acquisitions might increase substantially. This, coupled with the surging market volatility, caused the stock to slump 5.2% in price over the past month.

Here’s what could shape GPN’s performance in the near term:

Mixed Profit Margins

GPN’s 56.18% trailing-12-month gross profit margin is 13.3% higher than the 49.58% industry average. In addition, the company’s 11.33% and 32.73% respective trailing-12-month net income margin and levered free cash flow margin compare with 6.29% and 10.45% industry averages.

However, GPN’s 3.65% trailing-12-month ROE is 53.7% lower than the 7.88% industry average. And its 2.88% trailing-12-month ROTC is 42.5% lower than the 5% industry average, while its 2.13% ROA is 44.8% lower than the 3.86% industry average. Also, the company’s 0.19% trailing-12-month asset turnover is 70.3% lower than the 0.64% industry average.

Mixed Valuation Metrics

In terms of forward P/E, GPN is currently trading at 14.26x, which is 27.6% lower than the 19.69x industry average. Its 0.83 forward non-GAAP PEG ratio  is 43.4% lower than the 1.47 industry average. In addition, the stock’s 11.61 forward Price/Cash Flow multiple is 39% lower than the 19.06 industry average.  In comparison, its 12.24 forward EV/EBITDA ratio  is 10.5% lower than the 13.68 industry average.

However, GPN is currently trading at 4.53 times its forward Sales, which is 32.7% higher than the 3.41 industry average. Also, its 5.84 forward EV/Sales multiple is 60% higher than the 3.65 industry average.

Consensus Rating and Price Target Indicate Potential Upside

Among the 19 Wall Street analysts that rated GPN, 16 rated it Buy while three rated it Hold. The 12-month median price target of $187.00 indicates a 40.1% potential upside from yesterday’s closing price of $133.52. The price targets range from a low of $150.00 to a high of $240.00.

POWR Ratings Reflect Uncertainty

GPN has an overall C rating, which equates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

GPN has a C grade for Momentum and Stability. The stock is currently trading below its 50-day and 200-day moving averages of $140.99 and $160.91, respectively, indicating a downtrend, in sync with the Momentum grade. In addition, GPN’s slightly high 1.03 beta justifies the Stability grade.

Among the 52 stocks in the Consumer Financial Services industry, GPN is ranked #19.

Beyond what I’ve stated above, view GPN ratings for Growth, Sentiment, Value, and Quality here.

Bottom Line

The benchmark indexes have been slumping lately amid heightened geopolitical tensions and looming interest rate hike concerns. As a result, GPN, a constituent of the S&P 500 index, saw its stock fall 1.2% in price year-to-date. As geopolitical tensions worsen with Russia’s invasion of Ukraine, the benchmark indexes are expected to retreat further in the near term. Thus, we think investors should wait until the markets stabilize before investing in GPN.

How Does Global Payments Inc. (GPN) Stack Up Against its Peers?

While GPN has a C rating in our proprietary rating system, one might want to consider looking at its industry peers, Atlanticus Holdings Corporation (ATLC), Regional Management Corp. (RM), and 360 Finance, Inc. (QFIN), which have a B (Buy) rating.

GPN shares fell $6.52 (-4.88%) in premarket trading Thursday. Year-to-date, GPN has declined -1.23%, versus a -11.16% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
GPNGet RatingGet RatingGet Rating
ATLCGet RatingGet RatingGet Rating
RMGet RatingGet RatingGet Rating
QFINGet RatingGet RatingGet Rating

Most Popular Stories on

Christmas in July for Stock Investors!

Yes, the S&P 500 (SPY) made new highs again on Tuesday. But really it is the 6X gain for the Russell 2000 small cap index Tuesday...and 12% gain this past week that is grabbing everyone’s attention. Let’s discuss why this is happening...if it will continue...and my 12 favorite stocks to rally in the weeks ahead. Read on for more...

3 Promising Tech Stocks Under $40 for Long-Term Investment

The increasing demand for technology services worldwide fuels the tech industry. Amid this backdrop, it could be wise to buy under $40 tech stocks, such as HP Inc. (HPQ), Box, Inc. (BOX), and Teradata Corp (TDC), for long-term investment. Continue reading…

3 MedTech Stocks to Add to Your Portfolio in July

The MedTech sector’s promising future is driven by technological advances, unceasing demand for medical treatments due to an aging population, and increasing global incidence of diseases. To that end, strong MedTech stocks such as Tactile Systems Technology (TCMD), Electromed (ELMD), and Embecta (EMBC) could be wise portfolio additions in July. Read more...

3 Bank Stocks Benefiting From High Interest Rates

Amid global economic uncertainties, major U.S. banks like JPMorgan (JPM), Wells Fargo & Company (WFC), and PNC Financial Services (PNC) have defied expectations with strong revenue and earnings reports for the second quarter. Considering their robust performance, investing in these stocks could offer stable returns to your portfolio. Read more…

Investor Alert: Load Up on Small Cap Stocks!

Large caps time in the sun is now over and thus no shock that the S&P 500 (SPY) pulled back from recent highs. It is time for small caps to shine which was clear in their nearly 4% gain Thursday even as the Magnificent 7 was bathed in red. Why is this happening? What comes next? And what are the best stocks to own now? The answers to all that and more are shared in the commentary below...

Read More Stories

More Global Payments Inc. (GPN) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All GPN News