This Week’s Rising Star: Global Payments, Inc.

by Justin Lowry, President & CIO, Global Beta Advisors, LLC

This week’s rising star is Global Payments, Inc. (GPN). GPN is a global electronic payments service provider. It also develops programs for local banks to help manage their consumer credit and debit card portfolio. GPN has steadily climbed the ladder of the ever-growing electronic payments industry. It is currently the 8th largest provider by market share:

Electronic Payment

While GPN only holds a roughly 4% market share in the space, it has been expanding its market share, particularly over the past year. While much of the increased growth has come from the industry’s expansion, we believe it has carved itself as a true leader in the space:

Electronic Payments Market Share

Electronic Payments Market Share

Market share data for the “Electronic Payments Processing” industry per FactSet’s RBICS classications, as of 11/30/21

Market Share Leaders Year-Over-Year Growth

Electronic Payment Leaders Year-Over-Year Growth

Market share data for the “Electronic Payments Processing” industry per FactSet’s RBICS classications, between 11/30/20 and 11/30/21

On the surface, GPN attained solid market share growth but was fairly average compared to the rest of the leaders in the group. However, when you examine the valuations of each firm along with their scale, we believe GPN becomes more compelling:

Market Leaders Price-to-Sales Multiple

electronic payment market leaders price to sales multiple

Price-to-Sales multiple as of 11/30/21

Market Leaders Operating Margin

Market Leaders Operating Margin

Operating margin as of the most recent reported fiscal quarter from 11/30/21

As GPN’s stock price has come down in the second half of 2021, its valuations have become more compelling. As you can see, GPN is one of the cheapest stocks among its peer group above with a price-to-sales multiple of just 4.21. Notably, Visa is sitting at a price-to-sales multiple of 77, which is currently being supported by its enormous profitablity levels. However, GPN is still enjoying very strong margins and provides investors with similar growth to Visa but at a fraction of the cost.

While GPN has demonstrated strong organic growth, it is also utilizing its balance sheet to make strategic acquistions. Most recently, GPN agreed to acqurie MineralTree, an automated accounts payable processing company. This will enable GPN to expand its business model into business to business transactions. We believe it’s encouraging to see GPN focused on finding a variety of ways to grow, such as making acquisitions to broaden out its addressable market.

We believe that GPN is still in the early innings of its growth cycle as it continues to leverage its recent success into further competing with the largest players in the space, building itself into a large conglomerate. We believe that its attractive valuations relative to its profitability and growth rate makes GPN a rising star to watch in 2022 and beyond.

As of the close of 11/30/21, the Global Beta Rising Stars ETF held a position of 1.06% of its net asset value in Global Payments, Inc. (“GPN”).

Price-to-Sales is a measurement of a company’s market capitalization divided by its 12-month trailing sales.

Distributor: Compass Distributor, LLC

Rising Stars: Rapidly emerging companies that indicate the next generation of growth stocks.

Factset Rising Stars Index is composed of stocks listed on the NYSE and Nasdaq that demonstrate market share expansion in the fastest growing technology industries.

FactSet Research Systems Inc. is a global provider of integrated financial information, analytical applications and services for the investment and corporate communities.

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