Reviewing Global Payments (GPN) and Paypal (PYPL)

Global Payments (NYSE:GPN) and Paypal (NASDAQ:PYPL) are both large-cap business services companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitability, analyst recommendations, dividends, earnings and institutional ownership.

Valuation and Earnings

This table compares Global Payments and Paypal’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Global Payments $3.37 billion 6.48 $452.05 million $5.19 26.63
Paypal $15.45 billion 8.20 $2.06 billion $1.79 60.38

Paypal has higher revenue and earnings than Global Payments. Global Payments is trading at a lower price-to-earnings ratio than Paypal, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

98.8% of Global Payments shares are owned by institutional investors. Comparatively, 81.3% of Paypal shares are owned by institutional investors. 0.9% of Global Payments shares are owned by insiders. Comparatively, 0.2% of Paypal shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and price targets for Global Payments and Paypal, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Global Payments 1 5 14 0 2.65
Paypal 0 9 24 0 2.73

Global Payments presently has a consensus price target of $134.80, indicating a potential downside of 2.46%. Paypal has a consensus price target of $99.18, indicating a potential downside of 8.23%. Given Global Payments’ higher probable upside, research analysts clearly believe Global Payments is more favorable than Paypal.

Dividends

Global Payments pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. Paypal does not pay a dividend. Global Payments pays out 0.8% of its earnings in the form of a dividend.

Profitability

This table compares Global Payments and Paypal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Global Payments 13.43% 19.11% 6.04%
Paypal 13.31% 14.67% 5.16%

Risk & Volatility

Global Payments has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500. Comparatively, Paypal has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.

Summary

Global Payments beats Paypal on 9 of the 16 factors compared between the two stocks.

Global Payments Company Profile

Global Payments Inc. provides payment technology and software solutions for card, electronic, check, and digital-based payments. The company operates in three segments: North America, Europe, and Asia-Pacific. It offers authorization services, settlement and funding services, customer support and help-desk functions, chargeback resolution, terminal rental, sales and deployment, payment security services, consolidated billing and statements, and online reporting services. The company also provides an array of enterprise software solutions that streamline business operations of its customers in various vertical markets; and value-added services, such as analytic and engagement tools, as well as payroll services. In addition, it offers credit and debit card transaction processing services for various international card brands, including American Express, Discover Card, JCB, MasterCard, UnionPay International, and Visa; and non-traditional payment methods, as well as certain domestic debit networks, such as Interac in Canada. Further, the company provides e-commerce and omnichannel solutions; and gaming solutions to licensed gaming operators. It serves customers in various industries comprising education, restaurant, event management, hospitality, retail, healthcare, convenience stores and 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, and independent sales organizations in 32 countries of North America, Europe, the Asia-Pacific region, and Brazil. Global Payments Inc. was founded in 1967 and is headquartered in Atlanta, Georgia.

Paypal Company Profile

PayPal Holdings, Inc. operates as a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. Its payment solutions include PayPal, PayPal Credit, Braintree, Venmo, Xoom, and iZettle products. The company's Payments Platform allows consumers to send payments, withdraw funds to their bank accounts, and hold balances in their PayPal accounts in various currencies. It also offers gateway services that enable merchants to accept payments online with credit or debit cards. PayPal Holdings, Inc. was founded in 1998 and is headquartered in San Jose, California.

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