Intrinsic value of Global Payments - GPN

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$91.26

  Intrinsic Value

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  Value-price divergence*

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$91.26

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of GPN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 13.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -23.98
  30.50
  27.95
  25.66
  23.59
  21.73
  20.06
  18.55
  17.20
  15.98
  14.88
  13.89
  13.00
  12.20
  11.48
  10.83
  10.25
  9.73
  9.25
  8.83
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
Revenue, $m
  2,203
  3,782
  4,839
  6,080
  7,515
  9,148
  10,982
  13,020
  15,259
  17,697
  20,330
  23,154
  26,165
  29,357
  32,728
  36,273
  39,992
  43,881
  47,941
  52,173
  56,579
  61,162
  65,926
  70,878
  76,024
  81,371
  86,930
  92,708
  98,718
  104,972
  111,481
Variable operating expenses, $m
 
  3,011
  3,717
  4,547
  5,505
  6,597
  7,823
  9,185
  10,681
  12,311
  14,071
  15,475
  17,488
  19,621
  21,874
  24,244
  26,729
  29,328
  32,042
  34,871
  37,815
  40,878
  44,063
  47,373
  50,812
  54,386
  58,101
  61,963
  65,980
  70,160
  74,510
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,965
  3,011
  3,717
  4,547
  5,505
  6,597
  7,823
  9,185
  10,681
  12,311
  14,071
  15,475
  17,488
  19,621
  21,874
  24,244
  26,729
  29,328
  32,042
  34,871
  37,815
  40,878
  44,063
  47,373
  50,812
  54,386
  58,101
  61,963
  65,980
  70,160
  74,510
Operating income, $m
  238
  771
  1,122
  1,534
  2,009
  2,551
  3,159
  3,835
  4,577
  5,386
  6,259
  7,679
  8,677
  9,736
  10,854
  12,029
  13,262
  14,552
  15,899
  17,302
  18,763
  20,283
  21,863
  23,505
  25,212
  26,985
  28,829
  30,745
  32,738
  34,812
  36,971
EBITDA, $m
  485
  1,339
  1,713
  2,152
  2,660
  3,238
  3,888
  4,609
  5,401
  6,264
  7,196
  8,196
  9,262
  10,392
  11,585
  12,840
  14,156
  15,533
  16,970
  18,468
  20,027
  21,650
  23,336
  25,089
  26,911
  28,804
  30,771
  32,817
  34,944
  37,157
  39,462
Interest expense (income), $m
  94
  153
  231
  324
  432
  558
  701
  862
  1,040
  1,236
  1,450
  1,681
  1,928
  2,192
  2,472
  2,767
  3,078
  3,403
  3,744
  4,100
  4,471
  4,857
  5,258
  5,676
  6,109
  6,560
  7,029
  7,516
  8,022
  8,549
  9,097
Earnings before tax, $m
  173
  618
  891
  1,210
  1,577
  1,993
  2,458
  2,973
  3,537
  4,149
  4,809
  5,998
  6,749
  7,544
  8,382
  9,262
  10,185
  11,149
  12,155
  13,202
  14,293
  15,427
  16,605
  17,830
  19,102
  20,425
  21,800
  23,229
  24,716
  26,263
  27,874
Tax expense, $m
  35
  167
  241
  327
  426
  538
  664
  803
  955
  1,120
  1,298
  1,619
  1,822
  2,037
  2,263
  2,501
  2,750
  3,010
  3,282
  3,565
  3,859
  4,165
  4,483
  4,814
  5,158
  5,515
  5,886
  6,272
  6,673
  7,091
  7,526
Net income, $m
  125
  451
  650
  883
  1,151
  1,455
  1,794
  2,170
  2,582
  3,029
  3,511
  4,378
  4,927
  5,507
  6,119
  6,762
  7,435
  8,139
  8,873
  9,638
  10,434
  11,261
  12,122
  13,016
  13,945
  14,910
  15,914
  16,957
  18,043
  19,172
  20,348

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,163
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  10,664
  12,359
  15,813
  19,870
  24,558
  29,894
  35,890
  42,549
  49,866
  57,833
  66,438
  75,667
  85,505
  95,938
  106,954
  118,541
  130,691
  143,401
  156,670
  170,499
  184,898
  199,875
  215,445
  231,628
  248,444
  265,920
  284,084
  302,968
  322,609
  343,045
  364,318
Adjusted assets (=assets-cash), $m
  9,501
  12,359
  15,813
  19,870
  24,558
  29,894
  35,890
  42,549
  49,866
  57,833
  66,438
  75,667
  85,505
  95,938
  106,954
  118,541
  130,691
  143,401
  156,670
  170,499
  184,898
  199,875
  215,445
  231,628
  248,444
  265,920
  284,084
  302,968
  322,609
  343,045
  364,318
Revenue / Adjusted assets
  0.232
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
Average production assets, $m
  2,685
  2,163
  2,768
  3,478
  4,298
  5,232
  6,282
  7,447
  8,728
  10,123
  11,629
  13,244
  14,966
  16,792
  18,720
  20,748
  22,875
  25,100
  27,422
  29,843
  32,363
  34,984
  37,710
  40,542
  43,486
  46,544
  49,724
  53,029
  56,467
  60,044
  63,767
Working capital, $m
  264
  -144
  -184
  -231
  -286
  -348
  -417
  -495
  -580
  -672
  -773
  -880
  -994
  -1,116
  -1,244
  -1,378
  -1,520
  -1,667
  -1,822
  -1,983
  -2,150
  -2,324
  -2,505
  -2,693
  -2,889
  -3,092
  -3,303
  -3,523
  -3,751
  -3,989
  -4,236
Total debt, $m
  4,831
  6,597
  9,243
  12,351
  15,941
  20,029
  24,622
  29,722
  35,327
  41,430
  48,021
  55,091
  62,627
  70,619
  79,056
  87,932
  97,239
  106,975
  117,139
  127,733
  138,762
  150,234
  162,161
  174,557
  187,438
  200,824
  214,738
  229,204
  244,249
  259,903
  276,197
Total liabilities, $m
  8,034
  9,467
  12,113
  15,221
  18,811
  22,899
  27,492
  32,592
  38,197
  44,300
  50,891
  57,961
  65,497
  73,489
  81,926
  90,802
  100,109
  109,845
  120,009
  130,603
  141,632
  153,104
  165,031
  177,427
  190,308
  203,694
  217,608
  232,074
  247,119
  262,773
  279,067
Total equity, $m
  2,631
  2,892
  3,700
  4,650
  5,747
  6,995
  8,398
  9,956
  11,669
  13,533
  15,546
  17,706
  20,008
  22,450
  25,027
  27,738
  30,582
  33,556
  36,661
  39,897
  43,266
  46,771
  50,414
  54,201
  58,136
  62,225
  66,476
  70,895
  75,491
  80,273
  85,250
Total liabilities and equity, $m
  10,665
  12,359
  15,813
  19,871
  24,558
  29,894
  35,890
  42,548
  49,866
  57,833
  66,437
  75,667
  85,505
  95,939
  106,953
  118,540
  130,691
  143,401
  156,670
  170,500
  184,898
  199,875
  215,445
  231,628
  248,444
  265,919
  284,084
  302,969
  322,610
  343,046
  364,317
Debt-to-equity ratio
  1.836
  2.280
  2.500
  2.660
  2.770
  2.860
  2.930
  2.990
  3.030
  3.060
  3.090
  3.110
  3.130
  3.150
  3.160
  3.170
  3.180
  3.190
  3.200
  3.200
  3.210
  3.210
  3.220
  3.220
  3.220
  3.230
  3.230
  3.230
  3.240
  3.240
  3.240
Adjusted equity ratio
  0.196
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234
  0.234

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  125
  451
  650
  883
  1,151
  1,455
  1,794
  2,170
  2,582
  3,029
  3,511
  4,378
  4,927
  5,507
  6,119
  6,762
  7,435
  8,139
  8,873
  9,638
  10,434
  11,261
  12,122
  13,016
  13,945
  14,910
  15,914
  16,957
  18,043
  19,172
  20,348
Depreciation, amort., depletion, $m
  247
  567
  591
  619
  651
  687
  728
  774
  824
  878
  937
  517
  585
  656
  731
  810
  894
  980
  1,071
  1,166
  1,264
  1,367
  1,473
  1,584
  1,699
  1,818
  1,942
  2,071
  2,206
  2,345
  2,491
Funds from operations, $m
  676
  1,019
  1,241
  1,502
  1,802
  2,142
  2,523
  2,944
  3,406
  3,907
  4,448
  4,896
  5,511
  6,163
  6,850
  7,572
  8,328
  9,119
  9,944
  10,803
  11,698
  12,628
  13,595
  14,599
  15,643
  16,728
  17,856
  19,029
  20,248
  21,518
  22,839
Change in working capital, $m
  173
  -34
  -40
  -47
  -55
  -62
  -70
  -77
  -85
  -93
  -100
  -107
  -114
  -121
  -128
  -135
  -141
  -148
  -154
  -161
  -167
  -174
  -181
  -188
  -196
  -203
  -211
  -220
  -228
  -238
  -247
Cash from operations, $m
  503
  2,151
  1,282
  1,549
  1,856
  2,204
  2,593
  3,022
  3,491
  4,000
  4,548
  5,003
  5,626
  6,284
  6,978
  7,707
  8,470
  9,267
  10,098
  10,964
  11,865
  12,802
  13,776
  14,788
  15,839
  16,932
  18,067
  19,248
  20,477
  21,755
  23,086
Maintenance CAPEX, $m
  0
  -65
  -85
  -108
  -136
  -168
  -204
  -245
  -291
  -341
  -395
  -454
  -517
  -585
  -656
  -731
  -810
  -894
  -980
  -1,071
  -1,166
  -1,264
  -1,367
  -1,473
  -1,584
  -1,699
  -1,818
  -1,942
  -2,071
  -2,206
  -2,345
New CAPEX, $m
  -89
  -504
  -605
  -710
  -820
  -934
  -1,050
  -1,165
  -1,281
  -1,394
  -1,506
  -1,615
  -1,722
  -1,826
  -1,928
  -2,028
  -2,127
  -2,225
  -2,322
  -2,421
  -2,520
  -2,621
  -2,725
  -2,832
  -2,943
  -3,059
  -3,179
  -3,305
  -3,438
  -3,577
  -3,723
Cash from investing activities, $m
  -87
  -569
  -690
  -818
  -956
  -1,102
  -1,254
  -1,410
  -1,572
  -1,735
  -1,901
  -2,069
  -2,239
  -2,411
  -2,584
  -2,759
  -2,937
  -3,119
  -3,302
  -3,492
  -3,686
  -3,885
  -4,092
  -4,305
  -4,527
  -4,758
  -4,997
  -5,247
  -5,509
  -5,783
  -6,068
Free cash flow, $m
  416
  1,582
  592
  731
  900
  1,102
  1,339
  1,611
  1,919
  2,265
  2,646
  2,933
  3,386
  3,873
  4,394
  4,947
  5,533
  6,149
  6,795
  7,472
  8,179
  8,916
  9,684
  10,482
  11,312
  12,174
  13,070
  14,001
  14,968
  15,973
  17,018
Issuance/(repayment) of debt, $m
  -62
  2,217
  2,646
  3,108
  3,591
  4,088
  4,593
  5,100
  5,605
  6,103
  6,591
  7,069
  7,536
  7,992
  8,438
  8,876
  9,307
  9,736
  10,164
  10,594
  11,029
  11,472
  11,927
  12,396
  12,881
  13,386
  13,914
  14,466
  15,045
  15,654
  16,295
Issuance/(repurchase) of shares, $m
  -192
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -263
  2,217
  2,646
  3,108
  3,591
  4,088
  4,593
  5,100
  5,605
  6,103
  6,591
  7,069
  7,536
  7,992
  8,438
  8,876
  9,307
  9,736
  10,164
  10,594
  11,029
  11,472
  11,927
  12,396
  12,881
  13,386
  13,914
  14,466
  15,045
  15,654
  16,295
Total cash flow (excl. dividends), $m
  121
  3,799
  3,239
  3,839
  4,491
  5,190
  5,932
  6,711
  7,524
  8,367
  9,238
  10,003
  10,922
  11,865
  12,832
  13,823
  14,840
  15,885
  16,959
  18,066
  19,208
  20,389
  21,611
  22,878
  24,193
  25,561
  26,984
  28,466
  30,013
  31,626
  33,312
Retained Cash Flow (-), $m
  115
  -677
  -808
  -949
  -1,097
  -1,249
  -1,403
  -1,558
  -1,712
  -1,864
  -2,014
  -2,160
  -2,302
  -2,441
  -2,578
  -2,711
  -2,843
  -2,974
  -3,105
  -3,236
  -3,369
  -3,505
  -3,644
  -3,787
  -3,935
  -4,089
  -4,250
  -4,419
  -4,596
  -4,782
  -4,978
Prev. year cash balance distribution, $m
 
  531
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,653
  2,430
  2,889
  3,394
  3,941
  4,529
  5,153
  5,812
  6,503
  7,224
  7,843
  8,620
  9,424
  10,254
  11,112
  11,997
  12,910
  13,854
  14,830
  15,839
  16,884
  17,967
  19,091
  20,258
  21,471
  22,733
  24,047
  25,417
  26,845
  28,335
Discount rate, %
 
  8.60
  9.03
  9.48
  9.96
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.42
  27.74
  29.12
  30.58
  32.11
  33.71
  35.40
PV of cash for distribution, $m
 
  3,364
  2,044
  2,202
  2,322
  2,397
  2,424
  2,401
  2,331
  2,216
  2,065
  1,854
  1,661
  1,457
  1,251
  1,051
  863
  693
  543
  416
  310
  225
  159
  109
  73
  47
  30
  18
  10
  6
  3
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Global Payments Inc. provides payment solutions for credit cards, debit cards, electronic payments, and check-related services. It operates through three segments: North America, Europe, and Asia-Pacific. The company’s services include terminal sales and deployment, authorization processing, settlement and funding processing, customer support and help-desk functions, chargeback resolution, industry compliance, payment card industry security, consolidated billing and statements, and online reporting. It also offers credit and debit card transaction processing services for various international card brands, including American Express, UnionPay International, Discover Card, JCB, MasterCard, UnionPay International, and Visa; and non-traditional payment methods, as well as for certain domestic debit networks, such as Interac in Canada. In addition, the company provides integrated commerce, point-of-sale, marketing, payroll, and other solutions; credit and debit card cash advance, traditional and electronic check processing, and other services; and ecommerce and omnichannel solutions through Realex Payments, a European online payment gateway technology. It serves customers in various industries, including education, gaming, restaurant, hospitality retail, convenience stores, petroleum, professional services, automotive, and lodging. The company markets its products and services through direct sales force, trade associations, agent and enterprise software providers, referral arrangements with value-added resellers, financial institutions, and independent sales organizations in 30 countries of North America, Europe, and the Asia-Pacific region, as well as in Brazil. Global Payments Inc. was founded in 1967 and is headquartered in Atlanta, Georgia.

FINANCIAL RATIOS  of  Global Payments (GPN)

Valuation Ratios
P/E Ratio 111.1
Price to Sales 6.3
Price to Book 5.3
Price to Tangible Book
Price to Cash Flow 27.6
Price to Free Cash Flow 33.5
Growth Rates
Sales Growth Rate -24%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.3%
Cap. Spend. - 3 Yr. Gr. Rate 1.9%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 162%
Total Debt to Equity 183.6%
Interest Coverage 3
Management Effectiveness
Return On Assets 1.9%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 1.7%
Ret/ On T. Cap. - 3 Yr. Avg. 5.4%
Return On Equity 4.6%
Return On Equity - 3 Yr. Avg. 17.3%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 50.3%
Gross Margin - 3 Yr. Avg. 58%
EBITDA Margin 23.3%
EBITDA Margin - 3 Yr. Avg. 21.9%
Operating Margin 10.8%
Oper. Margin - 3 Yr. Avg. 14%
Pre-Tax Margin 7.9%
Pre-Tax Margin - 3 Yr. Avg. 11.8%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 8.4%
Effective Tax Rate 20.2%
Eff/ Tax Rate - 3 Yr. Avg. 21.9%
Payout Ratio 2.4%

GPN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GPN stock intrinsic value calculation we used $2898 million for the last fiscal year's total revenue generated by Global Payments. The default revenue input number comes from 2016 income statement of Global Payments. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our GPN stock valuation model: a) initial revenue growth rate of 30.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.6%, whose default value for GPN is calculated based on our internal credit rating of Global Payments, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Global Payments.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of GPN stock the variable cost ratio is equal to 83.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for GPN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Global Payments.

Corporate tax rate of 27% is the nominal tax rate for Global Payments. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the GPN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for GPN are equal to 57.2%.

Life of production assets of 25.6 years is the average useful life of capital assets used in Global Payments operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for GPN is equal to -3.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2746 million for Global Payments - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 151.919 million for Global Payments is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Global Payments at the current share price and the inputted number of shares is $13.9 billion.


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COMPANY NEWS

▶ Which Company Is the Best Payment Processing Stock?   [May-30-17 05:18PM  Motley Fool]
▶ Global Payments Joins Rank Of Stocks With 95-Plus Composite Rating   [May-09-17 10:51AM  Investor's Business Daily]
▶ ETFs with exposure to Global Payments, Inc. : May 8, 2017   [May-08-17 04:37PM  Capital Cube]
▶ Global Payments beats Street 1Q forecasts   [May-04-17 07:19AM  Associated Press]
▶ Global Payments Announces Support for Apple Pay in Taiwan   [May-02-17 08:40AM  Business Wire]
▶ Top 7 Technology Stocks from Credit Suisse for 2017   [Apr-21-17 12:47PM  TheStreet.com]
▶ 8 Stocks With Rising Revenue and EPS   [Apr-03-17 05:11PM  GuruFocus.com]
▶ [$$] For Global Payments, Growth Is in the Cards   [Feb-25-17 12:01AM  at Barrons.com]
▶ What Happened in the Stock Market Today   [Jan-09-17 04:48PM  at Motley Fool]
▶ The Hot Stock: Global Payments Climbs 7.2%   [04:35PM  at Barrons.com]
▶ Stocks to Watch: UnitedHealth, Lululemon, General Motors   [09:27AM  at The Wall Street Journal]
▶ Year in Review 2016: Maryland's largest layoffs   [Dec-28-16 08:05AM  at bizjournals.com]
▶ [$$] Payments Stocks With EPS Exposed to Higher Rates   [Dec-21-16 04:03PM  at Barrons.com]
▶ Is Global Payments Inc (GPN) Going to Burn These Hedge Funds?   [Dec-08-16 07:24AM  at Insider Monkey]
Stock chart of GPN Financial statements of GPN Annual reports of GPN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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