Can Global Payments (GPN) Q2 Earnings Navigate Rising Costs?

Core Viewpoint - Global Payments Inc. (GPN) is expected to report second-quarter 2024 results on August 7, with earnings estimated at $2.91 per share, reflecting an 11.1% increase year-over-year, and revenues projected at $9.2 billion, indicating a 6.4% growth from the previous year [1] Earnings Performance - GPN has consistently beaten consensus earnings estimates in the last four quarters, with an average surprise of 1.1% [2] - The current Earnings ESP for GPN is -0.98%, with the Most Accurate Estimate at $2.88 per share, which is lower than the consensus estimate [3] Zacks Rank and Predictions - GPN currently holds a Zacks Rank of 4 (Sell), indicating a less favorable outlook compared to higher-ranked stocks [4] Segment Performance - Merchant Solutions, GPN's largest segment, is expected to see a 6.9% increase in adjusted revenues year-over-year, driven by growing transaction volumes and new partnerships [5] - The adjusted operating income for Merchant Solutions is projected to grow by 6.8% according to consensus estimates [6] - Issuer Solutions is also expected to show nearly 6% growth in adjusted revenues, supported by core issuer growth and expanding accounts [7] - Revenue estimates for the Americas and Europe operations indicate year-over-year increases of 3.2% and 4.4%, respectively [8] Cost and Expenses - Increased costs are anticipated to partially offset profits, with adjusted selling, general, and administrative expenses expected to rise over 6% year-over-year [9] - The adjusted cost of service is projected to be around $523 million, with total operating expenses expected to climb 4.4% year-over-year [10] Stock Performance - GPN's stock has declined by 22.7% year-to-date, contrasting with a 4.5% growth in the industry and a 14.5% gain in the S&P 500 [11] - Competitors like Mastercard and Fidelity National Information Services have shown positive stock performance, while GPN's decline reflects investor concerns [11] Market Dynamics - Rising competition from emerging payment firms may impact GPN's pricing and margins, alongside increasing operating expenses despite cost control measures [13] - The decline in share price suggests diminishing investor confidence, with expectations of reduced consumer spending due to declining savings and weak disposable income growth [13]