Intrinsic value of Global Payments - GPN

Previous Close

$118.35

  Intrinsic Value

$209.84

stock screener

  Rating & Target

str. buy

+77%

Previous close

$118.35

 
Intrinsic value

$209.84

 
Up/down potential

+77%

 
Rating

str. buy

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 2017), $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 18.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  37.20
  33.98
  31.08
  28.47
  26.13
  24.01
  22.11
  20.40
  18.86
  17.47
  16.23
  15.10
  14.09
  13.18
  12.37
  11.63
  10.97
  10.37
  9.83
  9.35
  8.91
  8.52
  8.17
  7.85
  7.57
  7.31
  7.08
  6.87
  6.69
  6.52
Revenue, $m
  5,454
  7,307
  9,578
  12,305
  15,520
  19,247
  23,503
  28,298
  33,635
  39,513
  45,925
  52,862
  60,312
  68,264
  76,706
  85,627
  95,017
  104,871
  115,183
  125,952
  137,180
  148,872
  161,037
  173,684
  186,830
  200,490
  214,685
  229,440
  244,778
  260,729
Variable operating expenses, $m
  4,359
  5,572
  7,058
  8,844
  10,948
  13,388
  16,174
  19,313
  22,807
  26,654
  30,063
  34,604
  39,481
  44,686
  50,213
  56,052
  62,199
  68,649
  75,400
  82,449
  89,799
  97,453
  105,416
  113,695
  122,300
  131,243
  140,535
  150,193
  160,234
  170,676
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
  4,359
  5,572
  7,058
  8,844
  10,948
  13,388
  16,174
  19,313
  22,807
  26,654
  30,063
  34,604
  39,481
  44,686
  50,213
  56,052
  62,199
  68,649
  75,400
  82,449
  89,799
  97,453
  105,416
  113,695
  122,300
  131,243
  140,535
  150,193
  160,234
  170,676
Operating income, $m
  1,095
  1,735
  2,520
  3,461
  4,572
  5,859
  7,329
  8,985
  10,829
  12,859
  15,862
  18,258
  20,831
  23,578
  26,494
  29,575
  32,818
  36,221
  39,783
  43,502
  47,381
  51,419
  55,620
  59,989
  64,529
  69,247
  74,150
  79,246
  84,544
  90,053
EBITDA, $m
  2,985
  4,000
  5,243
  6,736
  8,496
  10,536
  12,865
  15,490
  18,412
  21,629
  25,139
  28,936
  33,014
  37,367
  41,988
  46,871
  52,011
  57,405
  63,050
  68,945
  75,091
  81,491
  88,150
  95,073
  102,269
  109,746
  117,517
  125,593
  133,989
  142,721
Interest expense (income), $m
  94
  286
  470
  702
  986
  1,326
  1,728
  2,194
  2,725
  3,325
  3,991
  4,726
  5,527
  6,394
  7,324
  8,318
  9,373
  10,487
  11,661
  12,892
  14,180
  15,526
  16,928
  18,389
  19,909
  21,489
  23,132
  24,838
  26,612
  28,455
  30,372
Earnings before tax, $m
  809
  1,265
  1,818
  2,476
  3,246
  4,131
  5,135
  6,260
  7,504
  8,867
  11,136
  12,731
  14,438
  16,253
  18,176
  20,202
  22,331
  24,561
  26,891
  29,322
  31,855
  34,491
  37,231
  40,080
  43,040
  46,116
  49,312
  52,634
  56,088
  59,681
Tax expense, $m
  218
  341
  491
  668
  876
  1,115
  1,387
  1,690
  2,026
  2,394
  3,007
  3,437
  3,898
  4,388
  4,907
  5,455
  6,029
  6,631
  7,261
  7,917
  8,601
  9,312
  10,052
  10,822
  11,621
  12,451
  13,314
  14,211
  15,144
  16,114
Net income, $m
  591
  923
  1,327
  1,807
  2,369
  3,016
  3,749
  4,570
  5,478
  6,473
  8,129
  9,294
  10,540
  11,865
  13,268
  14,747
  16,301
  17,929
  19,631
  21,405
  23,254
  25,178
  27,179
  29,258
  31,419
  33,664
  35,998
  38,423
  40,945
  43,567

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  17,823
  23,879
  31,301
  40,213
  50,719
  62,899
  76,807
  92,477
  109,919
  129,127
  150,082
  172,751
  197,099
  223,086
  250,673
  279,826
  310,514
  342,714
  376,414
  411,607
  448,301
  486,511
  526,264
  567,596
  610,554
  655,196
  701,586
  749,802
  799,928
  852,057
Adjusted assets (=assets-cash), $m
  17,823
  23,879
  31,301
  40,213
  50,719
  62,899
  76,807
  92,477
  109,919
  129,127
  150,082
  172,751
  197,099
  223,086
  250,673
  279,826
  310,514
  342,714
  376,414
  411,607
  448,301
  486,511
  526,264
  567,596
  610,554
  655,196
  701,586
  749,802
  799,928
  852,057
Revenue / Adjusted assets
  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
  11,016
  14,760
  19,348
  24,857
  31,351
  38,879
  47,476
  57,162
  67,943
  79,816
  92,768
  106,781
  121,831
  137,894
  154,946
  172,966
  191,935
  211,839
  232,669
  254,423
  277,104
  300,722
  325,294
  350,842
  377,396
  404,989
  433,665
  463,468
  494,452
  526,673
Working capital, $m
  -1,429
  -1,914
  -2,509
  -3,224
  -4,066
  -5,043
  -6,158
  -7,414
  -8,812
  -10,352
  -12,032
  -13,850
  -15,802
  -17,885
  -20,097
  -22,434
  -24,895
  -27,476
  -30,178
  -32,999
  -35,941
  -39,005
  -42,192
  -45,505
  -48,949
  -52,528
  -56,248
  -60,113
  -64,132
  -68,311
Total debt, $m
  8,710
  12,998
  18,253
  24,563
  32,001
  40,624
  50,471
  61,566
  73,915
  87,514
  102,350
  118,399
  135,638
  154,037
  173,569
  194,209
  215,936
  238,733
  262,593
  287,510
  313,489
  340,542
  368,686
  397,950
  428,364
  459,970
  492,815
  526,952
  562,441
  599,348
Total liabilities, $m
  12,618
  16,906
  22,161
  28,471
  35,909
  44,532
  54,380
  65,474
  77,823
  91,422
  106,258
  122,308
  139,546
  157,945
  177,477
  198,117
  219,844
  242,642
  266,501
  291,418
  317,397
  344,450
  372,595
  401,858
  432,272
  463,878
  496,723
  530,860
  566,349
  603,256
Total equity, $m
  5,204
  6,973
  9,140
  11,742
  14,810
  18,366
  22,428
  27,003
  32,096
  37,705
  43,824
  50,443
  57,553
  65,141
  73,197
  81,709
  90,670
  100,073
  109,913
  120,189
  130,904
  142,061
  153,669
  165,738
  178,282
  191,317
  204,863
  218,942
  233,579
  248,801
Total liabilities and equity, $m
  17,822
  23,879
  31,301
  40,213
  50,719
  62,898
  76,808
  92,477
  109,919
  129,127
  150,082
  172,751
  197,099
  223,086
  250,674
  279,826
  310,514
  342,715
  376,414
  411,607
  448,301
  486,511
  526,264
  567,596
  610,554
  655,195
  701,586
  749,802
  799,928
  852,057
Debt-to-equity ratio
  1.670
  1.860
  2.000
  2.090
  2.160
  2.210
  2.250
  2.280
  2.300
  2.320
  2.340
  2.350
  2.360
  2.360
  2.370
  2.380
  2.380
  2.390
  2.390
  2.390
  2.390
  2.400
  2.400
  2.400
  2.400
  2.400
  2.410
  2.410
  2.410
  2.410
Adjusted equity ratio
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  591
  923
  1,327
  1,807
  2,369
  3,016
  3,749
  4,570
  5,478
  6,473
  8,129
  9,294
  10,540
  11,865
  13,268
  14,747
  16,301
  17,929
  19,631
  21,405
  23,254
  25,178
  27,179
  29,258
  31,419
  33,664
  35,998
  38,423
  40,945
  43,567
Depreciation, amort., depletion, $m
  1,890
  2,265
  2,723
  3,274
  3,924
  4,677
  5,536
  6,505
  7,583
  8,770
  9,277
  10,678
  12,183
  13,789
  15,495
  17,297
  19,193
  21,184
  23,267
  25,442
  27,710
  30,072
  32,529
  35,084
  37,740
  40,499
  43,366
  46,347
  49,445
  52,667
Funds from operations, $m
  2,481
  3,188
  4,050
  5,082
  6,293
  7,692
  9,285
  11,074
  13,061
  15,243
  17,406
  19,972
  22,723
  25,654
  28,763
  32,044
  35,495
  39,113
  42,898
  46,848
  50,965
  55,250
  59,708
  64,342
  69,159
  74,163
  79,364
  84,770
  90,390
  96,235
Change in working capital, $m
  -387
  -486
  -595
  -715
  -842
  -976
  -1,115
  -1,256
  -1,398
  -1,540
  -1,680
  -1,817
  -1,952
  -2,083
  -2,212
  -2,337
  -2,460
  -2,582
  -2,702
  -2,822
  -2,942
  -3,063
  -3,187
  -3,314
  -3,444
  -3,579
  -3,719
  -3,866
  -4,019
  -4,179
Cash from operations, $m
  2,868
  3,673
  4,645
  5,796
  7,135
  8,669
  10,400
  12,331
  14,459
  16,783
  19,086
  21,789
  24,675
  27,738
  30,975
  34,381
  37,955
  41,695
  45,599
  49,669
  53,906
  58,314
  62,895
  67,656
  72,603
  77,742
  83,083
  88,635
  94,408
  100,414
Maintenance CAPEX, $m
  -803
  -1,102
  -1,476
  -1,935
  -2,486
  -3,135
  -3,888
  -4,748
  -5,716
  -6,794
  -7,982
  -9,277
  -10,678
  -12,183
  -13,789
  -15,495
  -17,297
  -19,193
  -21,184
  -23,267
  -25,442
  -27,710
  -30,072
  -32,529
  -35,084
  -37,740
  -40,499
  -43,366
  -46,347
  -49,445
New CAPEX, $m
  -2,986
  -3,743
  -4,588
  -5,509
  -6,494
  -7,528
  -8,597
  -9,686
  -10,781
  -11,873
  -12,952
  -14,012
  -15,050
  -16,063
  -17,052
  -18,020
  -18,969
  -19,904
  -20,830
  -21,754
  -22,681
  -23,618
  -24,572
  -25,548
  -26,553
  -27,594
  -28,675
  -29,803
  -30,984
  -32,222
Cash from investing activities, $m
  -3,789
  -4,845
  -6,064
  -7,444
  -8,980
  -10,663
  -12,485
  -14,434
  -16,497
  -18,667
  -20,934
  -23,289
  -25,728
  -28,246
  -30,841
  -33,515
  -36,266
  -39,097
  -42,014
  -45,021
  -48,123
  -51,328
  -54,644
  -58,077
  -61,637
  -65,334
  -69,174
  -73,169
  -77,331
  -81,667
Free cash flow, $m
  -920
  -1,172
  -1,418
  -1,648
  -1,845
  -1,995
  -2,085
  -2,103
  -2,038
  -1,884
  -1,848
  -1,500
  -1,053
  -508
  133
  867
  1,690
  2,598
  3,585
  4,648
  5,783
  6,985
  8,251
  9,579
  10,965
  12,409
  13,909
  15,466
  17,078
  18,747
Issuance/(repayment) of debt, $m
  3,415
  4,288
  5,255
  6,310
  7,438
  8,623
  9,847
  11,094
  12,349
  13,599
  14,835
  16,050
  17,238
  18,399
  19,532
  20,640
  21,727
  22,798
  23,859
  24,917
  25,979
  27,053
  28,145
  29,263
  30,415
  31,606
  32,845
  34,137
  35,489
  36,907
Issuance/(repurchase) of shares, $m
  819
  845
  840
  795
  699
  541
  312
  6
  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  
  4,234
  5,133
  6,095
  7,105
  8,137
  9,164
  10,159
  11,100
  12,349
  13,599
  14,835
  16,050
  17,238
  18,399
  19,532
  20,640
  21,727
  22,798
  23,859
  24,917
  25,979
  27,053
  28,145
  29,263
  30,415
  31,606
  32,845
  34,137
  35,489
  36,907
Total cash flow (excl. dividends), $m
  3,313
  3,961
  4,677
  5,458
  6,292
  7,169
  8,075
  8,997
  10,311
  11,716
  12,988
  14,550
  16,185
  17,890
  19,665
  21,507
  23,417
  25,395
  27,444
  29,566
  31,762
  34,038
  36,396
  38,842
  41,380
  44,015
  46,754
  49,602
  52,567
  55,654
Retained Cash Flow (-), $m
  -1,409
  -1,768
  -2,167
  -2,602
  -3,068
  -3,556
  -4,061
  -4,576
  -5,093
  -5,609
  -6,119
  -6,619
  -7,110
  -7,588
  -8,056
  -8,513
  -8,961
  -9,403
  -9,840
  -10,277
  -10,715
  -11,157
  -11,608
  -12,069
  -12,544
  -13,035
  -13,546
  -14,079
  -14,637
  -15,222
Prev. year cash balance distribution, $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 flow adjustment, $m
  40
  55
  73
  96
  123
  155
  192
  235
  283
  336
  395
  459
  529
  603
  683
  767
  856
  950
  1,049
  1,152
  1,260
  1,372
  1,489
  1,610
  1,737
  1,868
  2,005
  2,147
  2,294
  2,448
Cash available for distribution, $m
  1,904
  2,193
  2,509
  2,855
  3,225
  3,613
  4,013
  4,422
  5,218
  6,107
  6,869
  7,930
  9,075
  10,302
  11,609
  12,994
  14,456
  15,993
  17,604
  19,289
  21,048
  22,880
  24,788
  26,773
  28,836
  30,980
  33,208
  35,523
  37,930
  40,433
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  1,780
  1,903
  2,008
  2,091
  2,144
  2,162
  2,143
  2,085
  2,152
  2,178
  2,095
  2,042
  1,947
  1,816
  1,657
  1,478
  1,289
  1,098
  914
  742
  588
  454
  342
  250
  178
  123
  82
  53
  33
  20
Current shareholders' claim on cash, %
  95.8
  92.8
  90.6
  89.0
  88.0
  87.3
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0
  87.0

Global Payments Inc. is a provider of payment technology services. The Company provides payment and digital commerce solutions. The Company operates through three segments: North America, Europe and Asia-Pacific. The Company's segments primarily provide payment solutions for credit cards, debit cards, electronic payments and check-related services. The Company's segments target customers in various industries, including financial services, gaming, government, healthcare, professional services, restaurants, retail, universities, not-for-profit organizations and utilities. It provides services across a range of channels to merchants and partners in over 30 countries throughout North America, Europe, the Asia-Pacific region and Brazil. The Company performs a series of services, including authorization, electronic draft capture, file transfers to facilitate funds settlement and certain exception-based, back office support services, such as chargeback and retrieval resolution.

FINANCIAL RATIOS  of  Global Payments (GPN)

Valuation Ratios
P/E Ratio 144.1
Price to Sales 8.2
Price to Book 6.8
Price to Tangible Book
Price to Cash Flow 35.8
Price to Free Cash Flow 43.5
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 $3975 million for the last fiscal year's total revenue generated by Global Payments. The default revenue input number comes from 2017 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 37.2% 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 7%, 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 85.3%.

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 5.4% 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 1%.

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 202%.

Life of production assets of 10 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 -26.2%. 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 - $3795 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 159 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 $18.8 billion.

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