GPN - Embedded Expectations Analysis - 2021 09 09
Global Payments Inc. (GPN:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 21.2x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about volume recovery, revenue growth, and their AWS, PwC, and international partnerships.Specifically, management may lack confidence in their ability to meet increased revenue guidance, maintain strength in the credit card business, and secure new financial technology market entrants. They may also be overstating the potential of their cloud partnership with Amazon Web Services (AWS), the extent of new customer wins across their market verticals, and the quality of their new multi-year partnership with Banco Carrefour in Brazil. Furthermore, management may lack confidence in their ability to sustain growth in Issuer Solutions and their software businesses. Moreover, they may have concerns about the digitization of the business, the strength of their overseas partnerships, and the pace of recovery in volumes, particularly in Asia. Finally, management may lack confidence in their ability to redeploy their TSYS distribution diversification playbook in the PwC partnership, further secure accretive acquisitions, and sustain ACTIVE's strong booking trends.
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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