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Global Payments Inc. (NYSE:GPN) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $127.86 at one point, and dropping to the lows of $95.37. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Global Payments’s current trading price of $102.54 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Global Payments’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Global Payments
What’s the opportunity in Global Payments?
According to my valuation model, Global Payments seems to be fairly priced at around 16.36% above my intrinsic value, which means if you buy Global Payments today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $88.12, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Global Payments’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Global Payments generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Global Payments’s earnings over the next few years are expected to increase by 33%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? GPN’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?