V - Global Payments Seems Better Than The Valuation Suggests

2024-07-01 00:23:46 ET

Summary

• Global Payments has suffered from a painful one-two punch of slower growth in the face of intense fintech competition and a derating from growth stock multiples.
• There is potential for GPN shares to rebound, with tech-enabled offerings supporting merchant payment processing growth, as well as growth opportunities from B2B payments and bank-issued credit cards.
• Mid-single-digit revenue growth and mid-20%s FCF margins can support a fair value of $130.

Global Payments ( GPN ) was quite the growth stock back in the day, sporting multiples of EBITDA over 20% on the back 20%-plus EBITDA growth, and if you owned the shares through the 2010s, you made quite a bit of money. As is often the case with high-multiple growth stocks, though, when the music stops (in this case the robust revenue and EBITDA growth), the multiples collapse, and the shares are down more than 50% from the last time I wrote about them ....

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