GPN - Embedded Expectations Analysis - 2020 09 28
Global Payments Inc. (GPN:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 38.9x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, and management may have concerns about their addressable market, AWS collaboration, and TSYSSpecifically, they may be overstating their financial strength, the potential of their AWS collaboration, and the safety of QR codes. In addition, they may be exaggerating potential growth in their addressable market and may lack confidence in their ability to sustain increasing market share. Furthermore, they may have concerns about the impact of the elimination of their physical conversion services, and the distribution constraints of Total System Services, Inc (TSYS). Additionally, management may be exaggerating the potential of their Issuer Solutions, the capabilities of their open APIs to unbundle their services, and the efficiency of their new platform's enhancements. They may also lack confidence in their ability to mitigate transaction-level declines with bundled pricing and services. Finally, they may be concerned about the effectiveness of working at home, and the efficacy of their tracking network metrics for authorization and transaction volume
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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