QUOTE AND NEWS
Market Intelligence Center  Sep 17  Comment 
After closing Tuesday at $71.53, Global Payments Inc. (GPN) presents an attractive opportunity to get a 2.74% return in just 66 days, which is an annualized return of 15.18% (for comparison purposes only). To enter this trade, sell one Nov. '14...
newratings.com  Sep 15  Comment 
WASHINGTON (dpa-AFX) - Global Payments Inc (GPN), a provider of payment solutions, Monday agreed to acquire Ezi Holdings Pty Ltd (Ezidebit) for AU$305 million. Founded in 1998, Ezidebit is an integrated payments company focused on recurring...
DailyFinance  Sep 15  Comment 
Global Payments Inc. (NYSE: GPN), one of the largest worldwide providers of payment solutions, announced today that it has entered a definitive agreement to acquire Ezi Holdings Pty Ltd (Ezidebit). Founded in 1998, ...
Market Intelligence Center  Sep 10  Comment 
The patented option trade-picking algorithms behind MarketIntelligenceCenter.com's Artificial Intelligence Center have selected a covered call trade on Global Payments Inc. (GPN) that includes 4.65% downside protection. Sell one contract of the...
Forbes  Sep 4  Comment 
The payments domain is one of the fastest-growing segments within the financial services industry.
Market Intelligence Center  Aug 18  Comment 
The patented option trade-picking algorithms behind MarketIntelligenceCenter.com's Artificial Intelligence Center have selected a covered call trade on Global Payments Inc. (GPN) that includes 4.93% downside protection. Sell one contract of the...
SeekingAlpha  Jul 30  Comment 
ByMartin Vlcek: Global Payments, Inc. (NYSE:GPN) reported solid earnings for the final quarter of fiscal 2014 ended May 31, 2014 (SEC filing, conference call). Fiscal fourth quarter revenues grew 9% Y/Y to $674.0M. Cash diluted EPS grew 11% to...
SeekingAlpha  Jul 30  Comment 
Global Payments (NYSE:GPN) Q4 2014 Earnings Call July 29, 2014 5:00 pm ET Executives Jane Marie Elliott - Chief of Officer Staff and Executive Vice President Jeffrey S. Sloan - Chief Executive Officer and Director David E. Mangum -...
newratings.com  Jul 29  Comment 
WASHINGTON (dpa-AFX) - Global Payments Inc. (GPN) reported fourth-quarter net income attributable to the company of $51.6 million, or $0.72 per share, compared to $40.8 million, or $0.53 per share in the comparable quarter last year. Cash...
SeekingAlpha  Jul 29  Comment 
The following audio is from a conference call that will begin on July 29, 2014 at 17:00 PM ET. The audio will stream live while the call is active, and can be replayed upon its completion. Listen now Complete Story »




 
TOP CONTRIBUTORS

Global Payments Inc. (NYSE: GPN) provides services that allow small businesses to process credit and debit cards. The company also insures checks these small businesses accept from customers against bouncing or default. The firm's focus on small business helps it build its margins, as small companies have less leverage when negotiating processing fees and GPN can take a larger cut of the transaction.

GPN is the second largest independent merchant processor in the U.S., behind First Data, a much larger firm which processes 15 times as many transactions as GPN. GPN also offers money transfer services in the U.S. and Europe, but this segment is dwarfed by card processing which accounts for 90% of GPN's operating income.

In the last decade, GPN has expanded into Central and Eastern Europe, as well as China, and these fast-growing regions have great potential for GPN as the credit card market is in its early stages in these locations (as opposed to the relatively mature market in the USA).

Company Overview

During credit transactions involving its clients (merchants), GPN acts as the middleman between the merchant (such as a store) and a card issuer (usually a bank). A transaction begins when a card-holder attempts to pay with a credit or debit card at a merchant. GPN processes the transaction by accessing information from the card issuer to confirm the payment. This process involves intermediaries, each of whom is compensated a certain percentage of the transaction value. Thus the final amount that reaches the merchant is less than the amount paid by the card-holder. GPN temporarily makes up this difference, but bills its client, the merchant, at the end of each billing cycle to compensate for its loss, as well as to produce a net profit. [1]

Many of GPN's clients accept checks as well as cash and credit in payment, and are thus exposed to the risk of check bouncing. To alleviate this risk, GPN offers a check guarantee service. Each time a client merchant receives a check, GPN decides remotely, through its electronic check-readers, whether or not the check should be accepted. If accepted, GPN earns profits as a percentage of the check's value, but must reimburse its client the full value of the check if it bounces. To achieve this, GPN operates its own internal check verification and collection services. This service is attractive to merchants because it allows them to accept checks less stringently. [2]

Business and Financial Metrics

Fourth Quarter 2010 Results (ended May 31, 2010)[3]

For the full year, GPN's revenues grew 12% to $1,642.5 million compared to $1,462.3 million in the prior fiscal year. Normalized diluted earnings per share from continuing operations grew 21% to $2.54 compared to $2.10 in the prior year.

For the fourth quarter, revenues grew 16% to $425.1 million compared to $367.9 million in the prior year. Normalized diluted earnings per share from continuing operations grew 35% to $0.58 compared to $0.43 in the prior year quarter.

On a GAAP basis, the company reported full year diluted earnings per share from continuing operations of $2.52 compared to $2.10 in the prior year, and for the fourth quarter GAAP basis, diluted earnings per share from continuing operations of $0.56 compared to $0.43 in the prior year quarter. The fourth quarter and full year results include a one-time, pretax termination benefit of $2.6 million.

Business Segments

North America Merchant Services Segment (74% of 2010 revenues)

During the fiscal year ended May 31, 2010 (fiscal 2010), the North America Merchant Services represented 74% of the Company’s total consolidated revenues, and included operations in the United States and Canada. In the United States, the Company sells its services via ISOs, a direct sales force, trade associations, agent and value-added reseller (VAR) referral arrangements, as well as its telesales groups. The Company’s ISO channel targets a variety of merchant types with a typical annual bankcard volume of $150,000 or less. The ISOs contract with the Company to provide processing and other services depending on the ISOs requirements. These contracts are multi-year and priced by service on a per transaction basis. The ISOs act as a third-party sales group selling Global Payments-branded merchant acquiring products and services, with the majority of its ISOs marketing direct merchant acquiring. The Company’s direct sales channel receives qualified leads from its agent bank, VAR and trade association referral partners signing a variety of mid to large-sized merchants with annual bankcard volume on average above $300,000.

The Company’s United States revenue also includes check and gaming services and indirect merchant services. Its check products offer merchant customers risk management alternatives in the case of its verification and recovery offerings, or risk elimination in the case of its guarantee offerings, by using its internal and external databases of check writers to help decide whether the merchant should accept a check as the form of payment from a particular check writer. The Company’s check services products are part of its domestic direct service offering. Check guarantee services include check verification and guarantee services designed for a merchant’s specific needs and risk adversity. This service offering guarantees payment of all checks that are electronically verified. If a verified check is dishonored, the Company’s check guarantee service generally provides the merchant with reimbursement of the check’s face value, and then it pursues collection of the check through its internal collection services. In the specialized vertical market of gaming, the Company’s VIP LightSpeed software and VIP Preferred Advantage product provide the gaming industry with the tools necessary to establish revolving check cashing limits for the casino’s customers. The Company derives revenue from its gaming products primarily based on a percentage of the transaction value. In Canada, the Company sells its services primarily through its direct sales force using its bank referral relationships.

International Merchant Services Segment (26% of 2010 revenues)

International merchant services represented 26% of the Company’s total consolidated revenues in fiscal 2010, and consisted of operations in Europe and the Asia-Pacific region. The Company’s business in Europe is primarily located in the United Kingdom, the Czech Republic and the Russian Federation. Its Asia-Pacific region includes 11 countries and territories: Brunei, China, Hong Kong, India, Macau, Malaysia, Maldives, the Philippines, Singapore, Sri Lanka and Taiwan. The Company has a direct sales force in the United Kingdom, the Russian Federation and the Asia-Pacific region, through which it primarily sells its direct merchant acquiring services, while using its bank referral relationships. In the Czech Republic and the Russian Federation, the Company also provides indirect merchant acquiring services.

The Company competes with First Data Corporation, Bank of America Merchant Services, Chase Paymentech Solutions, TD Merchant Services, Elavon, Moneris Solutions, berbank, Alfa Bank, VTB, Raiffeisen Bank, Russian Standard Bank, SiNSYS, Euronet and Merchant Solutions.

Trends and Forces

The Emergence of Nontraditional Payment Processors

Paypal, Google Checkout and Amazon Payments bypass intermediaries such as GPN. As online shopping grows in volume, these alternative payment methods pose a threat to GPN as they gain a greater share of total transactions. GPN relies on the physical use of a credit card at a merchant's location, and has difficulties processing and profiting from other types of payments.

Consolidation in the Banking Industry

Consolidation within the banking industry may cause many financial institutions to take their credit and debit processing in-house, thus eliminating the need for a third-party processor such as GPN. In addition, larger banks possess greater bargaining power, and thus demand lower fees from GPN, to the detriment of its profits. [4]

The Performance of Merchant Customers Impacts GPN's Revenues

GPN is indirectly influenced by the performances of its merchant customers, which may in turn be influenced by economic trends. Much of the company's profits are derived from fees as a percentage of credit transaction through these merchants. So trends in consumer spending greatly influence GPN’s revenues, and a decline in retail sales (as many analysts expect in 2008) could hurt the company’s balance sheet. Furthermore, in the event of a reversed payment (canceled payment by card holder), the merchant must reimburse the card-holder. However, GPN may be liable for this charge when is merchant is either unwilling or unable to pay this sum.[5]

Competition

Merchant Services

  • First Data (FDC) : As the largest electronic transaction payment processor in the US, First Data's services overlap almost completely with those of GPN in merchant services. [6]
  • Moneris Solutions : as GPN's primary competitor in Canada, Moneris currently has a larger market share of the Canadian transaction processing market, and also offers ATM and POS services.

GPN competes in a populated arena of payment processors, and is smaller than most of its significant competitors. Although it cannot compete in raw transaction value with companies such as First Data (FDC), GPN has successfully secured a niche in the market by focusing on small businesses for clients.

Money Transfer

GPN can only be considered as a small participant in the diverse money transfer segment, and possesses no significant market share compared to most competitors. As such, GPN has historically focused almost solely on immigrants sending back money to Latin America.

  • Western Union Company (WU) : competes with GPN under its money transfer segment. It possesses greater transaction volume, more established locations, roughly 310,000 agent locations and a more established brand name with a 17% market share.
  • Moneygram International (MGI) : also competes with GPN in the money transfer market. It is almost completely devoted to providing money transfer services, and has an agent base of about 110,000 as of 2007 with a 4% market share.

Notes

  1. MGI 10-k, Item 1, Pg 6
  2. MGI 10-k, Item 1, Pg 7
  3. Yahoo! Finance: "Global Payments Reports Fourth Quarter and Year End Earnings" July 27, 2010.
  4. MGI 10-k, Item 1A, Pg 19
  5. MGI 10-k, Item 1A, Pg 17
  6. FDC 10-k
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