Global Payments (GPN) benefits from rising prices and the shift to digital payments, taking a small cut from each transaction. 

The company’s broad offerings, including transaction processing, inventory management, and data analytics, differentiate it from competitors. 

Recent expansion into international markets like Poland and Chile through acquisitions opens significant growth opportunities, particularly in B2B payments.

Despite strong performance, market caution remains due to competitive pressures and regulatory concerns. 

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As prices for goods and services rise, spending naturally increases. This isn’t just limited to groceries or gas, it’s across the board, from travel to dining out.

Payment processors are uniquely positioned to benefit from high inflation. Every time you swipe a card, they take a small cut of the transaction. So, when the price of items increases, so does their revenue.

With digital payments becoming more embedded in daily life these companies stand to gain even more.

Global Payments (GPN) is one of these companies…

The company offers merchant, issuer, business, and consumer solutions. It allows merchants to accept credit and debit cards while taking 1% to 2% in fees.

Shift to digital payments is expected to grow 6-8% annually through 2027. This shift creates a long runway for Global Payments, especially as it expands into less penetrated international markets.

The recent acquisition of EVO Payments expanded the company’s reach into new markets like Poland, Germany, Chile, and Greece.

B2B transactions, often still processed through checks or manual methods in these countries, represent a significant growth opportunity.

Furthermore, Global Payments does more than just process transactions. It provides additional services like inventory management, data analytics, and customer tools, aiming to become an essential part of its customers’ operations.

This shift has helped differentiate the company, setting it apart from competitors who stick to basic transaction processing.

Its scale and broad product offerings help it compete against big names like Fidelity (FIS), Fiserv (FI), and newer fintech companies like Block (SQ).

As more people move away from cash and toward digital payments, the company is well-positioned to grow, especially with its focus on business-to-business (B2B) payments and expansion into international markets.

These factors enabled  Global Payments to achieve an impressive 70% Uniform return on assets ”ROA” and 20% asset growth last year.

Despite the strong performance, the firm’s 14x Uniform P/E suggests market caution around competitive intensity and evolving payment regulations.

The company’s focus on expanding its digital payment offerings and its strong global presence makes it well-suited to capture more of the growing digital payments market.

While competition and economic uncertainties pose challenges, Global Payments’ strong market position, international expansion, and undervalued stock price make it a compelling choice for investors.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Strategist &
Director of Research
at Valens Research