Visa (NYSE:V) and Mastercard (NYSE:MA) usually get all the attention as preeminent electronic payment processors given their brand names and dominant global payment networks. Global Payments (NYSE:GPN) is a fraction of the size of its larger rivals, but is worth a look given its slightly more reasonable valuation and strong track record of sales and profit growth. (For more information about investing in credit card companies, read Investing In Credit Card Companies.)

7 Tips On Buying A Home In A Down Market

Recent Results
Second quarter revenues advanced 12% to $409 million, which the company attributed to strength from its Independent Sales Organization (ISO) client base. Total North American revenue, which stems from the U.S. and Canada, improved 10.5% to account for 73.2% of total quarterly sales. Transaction growth in the U.S. grew an impressive 19%.

International revenue from Europe and Asia grew a stronger 15.4% and made up the rest of the revenue mix as the company cited "excellent performance by United Card Services in Russia" and similar trends in the U.K. The Money Transfer business, which competes with the likes of Moneygram (NYSE:MGI), was categorized as a discontinued operation as Global Payments announced the sale of the division back in November.

Total operating income expanded 13.9% to $88.7 million on a marginal 1.7% advance in North America and impressive 46.7% advance at the international segment. Reported net income grew 27% to 76 cents per diluted share and 25% to 71 cents per diluted share when excluding the Money Transfer unit. The bottom line results beat analyst projections.

For the full year, management said to expect revenue growth between 8-10% for a total top line of approximately $1.6 billion. Earnings will likely advance 12% to 17% to between $2.35 and $2.46 per diluted share.

The Bottom Line
Quarterly cash flow trends were solid but a bit inflated due to the settlement of processing assets, which management said during the conference call was likely to flow back out, meaning operating cash flow likely fall from last year's quarter. However, as it has in past quarters, operating cash flow exceeded reported net income and capex needs were minimal to illustrate that the payment processing business model is very lucrative.

At an expected P/E growth ratio of just over 1.33, shares of Global Payments are expected to provide investors with future value. The overall industry is trading at high earnings multiples with rivals such as Fundtech (Nasdaq:FNDT) valued at 36 times earnings. Visa is trading at more than 27 times earnings and Mastercard is trading at a comparable level to the rest of the industry. (Avoid these pitfalls to keep your credit score healthy and your debt under control. Read 6 Major Credit Card Mistakes.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  2. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  3. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  4. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
  5. Stock Analysis

    Why the Bullish Are Turning Bearish

    Banks are reducing their targets for the S&P 500 for 2016. Here's why.
  6. Stock Analysis

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
  7. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
  8. Credit & Loans

    10 Reasons To Use Your Credit Card

    There are several benefits to paying with credit instead of debit, if you use a credit card responsibly.
  9. Credit & Loans

    5 Extreme Ways To Raise Your Credit Score

    Desperate to rebuild your credit score because you can’t obtain a loan with a decent interest rate? Here are some extreme options to try.
  10. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  1. How can you pay your Walmart credit card?

    Holders of Walmart credit cards can make payments on their balances due by mail, online or at Walmart and Sam's Club stores. ... Read Full Answer >>
  2. Is Apple Pay safe and free?

    Apple Pay is a mobile payment system created by Apple to reduce the number of times shoppers and buyers have to pay for goods ... Read Full Answer >>
  3. Can you use your Walmart credit card at Sam's Club?

    Consumers can use their Walmart credit cards to shop at Sam's Club. However, they cannot use their Walmart credit cards when ... Read Full Answer >>
  4. How can you cancel your Walmart credit card?

    Walmart offers two types of credit cards: the Walmart MasterCard and the Walmart credit card. How to Close Your Walmart Credit ... Read Full Answer >>
  5. Does the Walmart credit card have an annual fee?

    The Walmart credit card does not charge annual fees to its cardholders. It does, however, have other fees associated with ... Read Full Answer >>
  6. How do NetSpend cards work?

    NetSpend prepaid MasterCard and Visa cards are popular prepaid debit cards requiring no minimum balance and no credit check. ... Read Full Answer >>
Trading Center