GPN - Embedded Expectations Analysis - 2020 07 09
Global Payments Inc. (GPN:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 33.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their general outlook, the sustainability of customer wins, and cost initiativesSpecifically, management is confident that the competitive landscape will change because of the coronavirus crisis, and that QSR mid-market and small are down from a volume standpoint. In addition, they may be overstating the strength of their pure-play payments model, their anticipated cost initiatives, and their position of strength. Furthermore, they may lack confidence in their ability to sustain new wins in their software portfolio, adjusted net revenue growth, strong volumes in managed services, and solid operating performance across all segments. Meanwhile, they may be exaggerating the consistency of their capital allocation priorities, the expected margin expansion in business and consumer throughout 2020, and the new capabilities of their solutions for their customers
Global Payments is a pure play payment technology company providing payments and software solutions to merchants and financial institutions. The company has three segments: Merchant Solutions, which includes authorization services, chargeback resolution, and payment security services; Issuer Solutions, which provides solutions that enable financial institutions and other financial service providers to manage their card portfolios and reduces technical difficulty and overhead on a single platform; and Business and Consumer Solutions, which provides general purpose reloadable prepaid debit and payroll cards, demand deposit accounts and other financial service solutions through its Netspend? brand.
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