Why Is Larry Robbins Bullish on Global Payments Inc. (GPN) Now?

As an avid investor and financial analyst, I've been keeping a close eye on the payment processing industry, and one company that has caught my attention is Global Payments Inc. (GPN). The company's recent financial performance, strategic initiatives, and growth prospects have led renowned investor Larry Robbins to express a bullish stance on the stock. In this article, I'll delve into the reasons behind Robbins' optimism and explore the potential risks and challenges that Global Payments may face in the near future.

First, let's address the elephant in the room: Global Payments' stock price has been volatile in recent months, with a 18.56% decline over the past year. However, Robbins sees this as an opportunity, as the stock is trading at a significant discount to its intrinsic value. In fact, one analyst, Maxell (MA), has estimated that the stock is undervalued by 34.3%, with an implied upside of 34.3%. This valuation discrepancy suggests that Global Payments' current stock price may not fully reflect the company's true potential.

One of the primary reasons for Robbins' bullish stance is Global Payments' strong financial performance. In 2023, the company's revenue increased by 7.56% to $9.65 billion, and earnings grew by a staggering 784.57% to $986.23 million compared to the previous year. This impressive growth can be attributed to the company's diversified revenue streams, strategic acquisitions, and resilience in challenging economic environments.

Global Payments operates through two segments: Merchant Solutions and Issuer Solutions. The Merchant Solutions segment offers a wide range of services, including authorization, settlement and funding, customer support, and payment security. This diversification helps mitigate risk and ensures a steady revenue stream. Additionally, the company's Issuer Solutions segment provides solutions that enable financial institutions and retailers to manage their card portfolios through a platform, as well as commercial payments, account payables, and electronic payment alternatives solutions for businesses and governments.