GPN - Embedded Expectations Analysis - 2020 12 18
Global Payments Inc. (GPN:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 37.9x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about their market share, merchant volumes, and technology-enabled strategySpecifically, management may lack confidence in their ability to expand market share, continue executing Xenial's cross-sell strategy, and invest in all three levers of their business. Furthermore, they may be exaggerating their ability to deliver annual run rate revenue synergies and expense savings, and they may lack confidence in the potential of their merchant volumes. Also, they may have concerns about the continued pressure on the Travel and Entertainment (T&E) industry and commercial card business, the potential of their technology-enabled strategy, and the client's varying pace of patent realization. Finally, they may be overstating the capabilities of their merchant referral agreement with CIBC in Canada, the opportunities of their joint venture with MoneyToPay, and the sustainability of sales growth in Spain
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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