- We upgrade GPN to “Conviction Buy” as PE NTM multiple (13.8x) has declined below its pre-pandemic-lows, whilst the company is expected to grow EPS by ~20% over the next cycle.
- Over the next cycle revenue CAGR for GPN (13% over 2021-24E) is expected to be broadly in line with Visa (14%) but moderately lower than that of Mastercard (17%).
- We expect GPN's EPS growth (21% CAGR over 2021E-24E) to be ahead of Visa (18%) and slightly below that of Mastercard (24%) given its strong operating leverage and share buybacks.
- We see the yawning valuation gap between the three payment companies as unjustified, as GPN trades at 13.8x NTM PE vs its pre-pandemic average of 22x and Visa @30x and Mastercard @36x.
- We expect GPN's NTM PE multiple to rebound to 20x over the next year, which when applied to our EPS forecast of $11.97 imputes an upside of 86%. Upgrade to "Conviction Buy".
For further details see:
Global Payments: This One's A No-Brainer - Buy GPN Over Visa And Mastercard