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Will Heartland Buyout Aid Global Payment (GPN) Q2 Earnings?

Global Payments Inc. GPN is scheduled to report second-quarter 2017 results on Aug 3, before the opening bell.

Riding on an increase in revenues, the company surpassed the Zacks Consensus Estimate by 8% in the first quarter. Results reflected synergies from the Heartland acquisition (completed last year) and strong organic growth in its direct distribution businesses in the U.S.

Let’s see how things are shaping up for this announcement.

Factors to Consider     

The company’s earnings will see synergistic effects of the Heartland acquisition, which has accelerated growth by broadening its direct distribution channels in the United States and enhancing its vertical markets’ exposure.

Last quarter, the company’s gaming business gave a solid performance. It recently renewed and expanded its relationship with Caesars Entertainment. This renewal reflects the strength of its gaming services and we expect the business to continue its strong performance in the to-be-reported quarter.

The company’s international business led by Europe and Asia-Pacific remains strong. Given its favorable performance in e-commerce and omni-channel solutions business in Europe, we expect the strength to continue.

Nevertheless, the bottom line may suffer from an increase in interest cost due to high debt incurred to fund the Heartland deal. Also, its international operations will be exposed to foreign exchange volatility.

Earnings Whispers

Our proven model does not conclusively show that Global Payments is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: Global Payments has an Earning ESP of 0.00%. This is because the Most Accurate estimate of 87 cents per share is in line with the Zacks Consensus Estimate.  You can uncover the best stocks to buy or sell before they’re reported with our https://www.zacks.com/premium/esp-buy?adid=zp_article_espfil...">Earnings ESP Filter.

Zacks Rank: Global Payments carries a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, the company's 0.00% ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:  

Kellogg Company K will report second-quarter 2017 earnings results on Aug 3. It has an Earnings ESP of +2.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intercontinental Exchange, Inc. ICE has an Earnings ESP of +1.33% and a Zacks Rank #2. The company is expected to report second-quarter earnings results on Aug 3.

Financial Engines, Inc. FNGN has an Earnings ESP of +4.00% and a Zacks Rank #2. The company is expected to report second-quarter earnings results on Aug 8.

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Financial Engines, Inc. (FNGN): Free Stock Analysis Report
 
Kellogg Company (K): Free Stock Analysis Report
 
Intercontinental Exchange Inc. (ICE): Free Stock Analysis Report
 
Global Payments Inc. (GPN): Free Stock Analysis Report
 
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