Last update on 2024-06-05

Global Payments (GPN) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Discover the Piotroski F-Score analysis of Global Payments (GPN) for 2023, showcasing an impressive final score of 8 out of 9. Learn about the company's profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 8

We're running Global Payments (GPN) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Global Payments (GPN) scored an 8 out of 9 on the Piotroski F-Score, indicating a strong financial position. Here's a breakdown: 1. Profitability: Positive net income in 2023. 2. Cash Flow: Positive 2023 operating cash flow. 3. ROA: Increased from 2022 to 2023 but below the industry median. 4. Operating Cash Flow > Net Income: Met in 2023. 5. Leverage: Increased from 2022 to 2023, which is a concern. 6. Current Ratio: Improved from 2022 but remains below industry median. 7. Shares: Outstanding shares decreased in 2023. 8. Gross Margin: Increased from 2022 to 2023. 9. Asset Turnover: Marginal improvement from 2022 to 2023.

Insights for Value Investors Seeking Stable Income

Global Payments (GPN) appears to be a strong candidate for investment with most criteria showing positive trends. However, the rising leverage and below-industry-median ROA and current ratio pose some risks. I recommend considering GPN for your portfolio while keeping an eye on its debt levels and liquidity to ensure it doesn't impact future stability.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Global Payments (GPN)

Company has a positive net income?

Piotroski's F-Score begins with checking a company's net income to determine profitability. A positive net income in the most recent fiscal year indicates that the company is profitable, adding 1 point to its Piotroski F-Score.

Global Payments (GPN) reported a net income of $986,233,000 for the year 2023. This is a positive net income, which means the company is profitable and thus adds 1 point to its Piotroski F-Score. When we examine the historical trend over the past 20 years, there is a clear upward trajectory in the net income of Global Payments. For instance, from a net income of $53,300,000 in 2003, the company has grown this figure steadily, with occasional fluctuations such as in 2009 ($37,217,000) and 2022 ($111,493,000). Despite these variances, the overall growth trajectory has been positive. The high net income in 2021 ($965,460,000) and the consistent performance into 2023 indicates sound financial health and efficient profitability scalability. In conclusion, the positive net income is a favorable indicator, worthy of adding a point under the Piotroski F-Score.

Company has a positive cash flow?

Cash flow from operations (CFO) measures the amount of cash a company generates from its regular business activities. It's vital as it indicates whether the company can generate enough cash to maintain and grow its operations.

In 2023, Global Payments (GPN) reported a cash flow from operations (CFO) of $2,248,741,000. This is a positive figure, indicating strong cash-generating capability from its core business activities. If we look at the historical data, there has been a consistent positive trend in operating cash flows over the past two decades, with a few exceptions such as in 2012. This positive trend in CFO is a very promising indicator of the company's financial health. Consequently, Global Payments (GPN) secures 1 point for having a positive CFO in 2023.

Return on Assets (ROA) are growing?

The Return on Assets (ROA) criterion evaluates the profitability of a company relative to its total assets, indicating how efficiently management is using assets to generate earnings.

Global Payments (GPN) saw an increase in its ROA from 0.0025 in 2022 to 0.0207 in 2023. This marks an improvement in efficiency, as the company has managed to generate more profit per dollar of assets. However, it is important to note that, despite this increase, GPN's ROA still lags behind the industry median of 0.2903 in 2023. Comparing the historical data, GPN's operating cash flow has exhibited a positive trend overall, despite fluctuations. This increase earns GPN 1 point based on the Piotroski criterion, reflecting positive momentum in managerial efficiency. While positive, GPN might focus on further improving its asset utilization to close the gap with industry peers.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income compares the company's ability to generate cash from operations relative to its accounting profits. This indicates liquidity and financial health.

For Global Payments (GPN) in 2023, the operating cash flow was $2,248,741,000 while the net income stood at $986,233,000. The operating cash flow is significantly higher than net income, which earns the company 1 point on the Piotroski F-score. This situation is favorable because it signifies robust cash generation, critical for sustaining operations and growth. Historically, GPN's operating cash flow has generally trended upwards, often exceeding net income, indicating consistent financial health.

Liquidity of Global Payments (GPN)

Leverage is declining?

Change in leverage measures the company's shift in the financial burden due to its debt levels and it is important to monitor whether a firm is increasing or reducing its financial leverage.

Analyzing the data provided, Global Payments' leverage has increased from 0.2743 in 2022 to 0.3103 in 2023. Since the leverage has increased, it signifies a heightened financial risk because higher leverage means a greater proportion of debt in the company’s capital structure. This increase in leverage does not warrant a point and merits close scrutiny. Historical data portray fluctuations, but the current rise is significant within the context

Current Ratio is growing?

The current ratio, which compares a firm's current assets to its current liabilities, assesses short-term financial health.

In 2023, Global Payments (GPN) has a current ratio of 0.9936, up from 0.9153 in 2022. This signifies an increase in liquidity as it indicates the company's ability to manage short-term liabilities has improved compared to last year. Though the trend is positive and gets a score of 1 point on the Piotroski scale, it's essential to note that the current ratio remains below the industry median of 1.4598 in 2023 and significantly lower than its historical average. While better than the previous year, Global Payments might still face liquidity risks.

Number of shares not diluted?

Change in shares outstanding is a crucial criterion because it impacts earnings per share (EPS) and shareholder value.

For Global Payments (GPN), the outstanding shares have decreased from 275,191,000 in 2022 to 261,126,000 in 2023, registering a reduction. As per the Piotroski F-score criterion, this decrease is favorable, assigning 1 point for this category. Over the last 20 years, the company's shares outstanding have shown a gradual increase but not exceeding the 2020 peak of 299,222,000. This recent decline can be seen as a positive sign, potentially reflecting share buybacks or other efforts to improve shareholder value. Therefore, a score of 1 should be assigned for this criterion.

Operating of Global Payments (GPN)

Cross Margin is growing?

The Change in Gross Margin compares the difference over a period to gauge profitability increases.

A Gross Margin of 0.6139 in 2023, up from 0.579 in 2022, marks an improvement. While the increase of 0.0349 from 2022 to 2023 might appear minor, it represents efficiency gains in managing production costs. Historically, GPN's margin fluctuated, peaking at 0.6747 in 2018. Comparatively, the industry's median margin was consistently below GPN's, dipping to 0.2903 in 2023. Hence, the rise warrants a point, conveying positive cost-management and profitability amidst industry challenges.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales.

Global Payments (GPN) realized an Asset Turnover of 0.2024 in 2023, up slightly from 0.1993 in 2022. With such marginal improvement, GPN shows a positive trend in efficiently using its assets to generate revenue. The long-term data supports the interpretation that since 2016, the Asset Turnover has generally been improving, reinforcing the credibility of GPN's operational efficiency resurgence. Thus, according to the Piotroski analysis, GPN would earn 1 point for this criterion.