Global Payments Higher After Beating Quarterly Expectations, Raising Guidance

Shares of payment technology company Global Payments (GPN) are advancing after the company reported first quarter financial results that surpassed analysts' expectations. In conjunction with its Q1 earnings report, the company raised its fiscal year 2017 profit view.

WHAT'S NEW: Ahead of the market open this morning, Global Payments reported Q1 EPS of 86c on revenue of $817.3M, beating analysts' estimates of 83c and $816.17M, respectively. The company attributed the strong quarterly performance to the acceleration of organic growth and the progress with its Heartland integration efforts. Late last year, Global Payments announced it was acquiring competitor Heartland Payment Systems and the acquisition was completed in late April. "Our fiscal 2017 is off to a terrific start, with organic growth accelerating sequentially across our key markets in the first quarter," said Jeff Sloan, Global Payments' Chief Executive Officer. "Heartland continued its strong growth momentum in the United States. Our businesses in Europe performed exceptionally well, and our Asia business produced its highest rate of organic revenue growth in several quarters." Sloan concluded, "We also could not be more pleased with our Heartland integration efforts, which continue to track ahead of our expectations."

WHAT'S NOTABLE: With its quarterly report, the company raised its 2017 EPS view to $3.45-$3.55 from its prior view of $3.40-$3.50. Prior to the earnings report, analysts were expecting $3.47 in EPS. Additionally, the company now sees adjusted operating margin for fiscal 2017 to expand by as much as 50 basis points. Global Payments backed its prior revenue view of $3.2B-$3.3B, or growth of 47% to 52% over fiscal 2016.

ANALYST VIEW: On September 15, Goldman Sachs analyst James Schneider upgraded Global Payments to Buy from Neutral saying the company's revenue growth is likely to exceed 10% over the next two years, which is ahead of consensus and management's high-single digit growth target. Cost and revenue synergies from the Heartland acquisition are likely to exceed investor expectations, Schneider told investors in a research note at the time. Schneider raised his price target for the shares to $88 from $80.

PRICE ACTION: Shares of Global Payments are up 3.3%, or $2.49, to $78.93.

OTHERS TO WATCH: Shares of other publicly traded payment and transaction processing companies that compete with Global Payments include Total System Services (TSS), Fiserv (FISV), First Data (FDC) and Vantiv (VNTV).