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We came across a bullish thesis on Global Payments Inc. (GPN) on Substack by Excelsior Capital. In this article, we will summarize the bulls’ thesis on GPN. Global Payments Inc. (GPN)'s share was trading at $117.08 as of Nov 22nd. GPN’s trailing and forward P/E were 22.09 and 9.06 respectively according to Yahoo Finance.
A customer making a purchase at a modern retail store terminal, showing the ubiquity of the company’s payment solutions.
Global Payments Inc. (GPN) has drawn attention due to its stagnant stock performance, particularly following a significant decline in 2024, which has prompted questions about whether it is a hidden gem or a potential value trap. Despite fluctuating stock prices between $100 and $140 since 2023, the company has consistently grown earnings per share (EPS), indicating solid underlying performance. The stock's drop can be attributed to several factors, including broader macroeconomic concerns impacting fintech companies, missed margin growth targets, and communication missteps by management that undermined investor confidence. Additionally, GPN faces mounting competition, especially in its Merchant Solutions division, from emerging players like Adyen and Stripe.
However, the company's recent Q3 2024 results showed promise, with adjusted net revenue growth of 6% and adjusted EPS growth of 12%, which helped stabilize the stock. This performance, along with the reaffirmation of its 2024 outlook, suggests that the company is on track to recover. Despite these setbacks, GPN's long-term prospects appear promising when examined through the lens of its historical growth, strong cash flow generation, and profitability. Over the past five years, GPN has demonstrated consistent revenue and profit growth, with a compound annual growth rate (CAGR) of 22.72% in revenue and a 23.85% CAGR in net income. The company's stable operating margins, particularly in its Merchant Solutions division, further support its ability to navigate challenging market conditions.
GPN's competitive positioning within the fintech space is also noteworthy. While it faces fierce competition, particularly from larger players like Fiserv and FIS, it offers attractive financial metrics. Its price-to-earnings (PE) ratio of 18.92 is lower than many of its competitors, suggesting potential undervaluation relative to its peers. Additionally, GPN has outperformed several rivals in terms of revenue and EBITDA growth, positioning it well in the rapidly expanding payment processing industry.
Looking ahead, GPN has a clear strategy to strengthen its market position, focusing on small and medium-sized businesses (SMBs) and providing comprehensive solutions across various verticals. The company is also investing in operational efficiencies, aiming to unlock over $500 million in adjusted run-rate operating income benefits by 2027. With these efforts, GPN is well-positioned for continued growth, making its current stock price potentially attractive for investors seeking exposure to a leading player in the payment processing industry.