Yahoo Finance Global Payments' Term Loan Gets Rating Action From Moody's
Credit rating giant Moody's Investors Service recently assigned a Ba2 rating to Global Payments Inc.’s GPN new $500 million term loan. The company’s Ba2 Corporate Family Rating (CFR) and the Ba2 rating for its current senior secured credit facilities along with positive ratings outlook remain the same.
Global Payments closed the buyout of AdvancedMD on Sep 4, 2018 from Marlin Equity Partners. The company used around $700 million of revolver borrowings for this deal and expects the acquisition to contribute nearly $7-$8 million revenues. It also anticipates to complete its another pending purchase of SICOM Holdings, Inc. (SICOM) in the fourth quarter of 2018. For this, it would be paying approximately $415 million in cash.
Ratings Representation
The Ba2 CFR shows Global Payments' robust top-line and earnings growth, primarily driven by its technology-enabled payment services and a solid distribution channel. Its impressive credit profile is backed by its recurring, transaction-based revenues, excellent operating scale and a massive geographic foothold around the globe.
However, the rating is constrained by the company’s high leverage of about 4.7x as well as proforma for the consolidations of AdvancedMD and SICOM. The credit rating agency estimates the company’s leverage to reduce to nearly 4x during the latter six months of 2019 from its solid adjusted EBITDA growth and a decreased debt level. Moreover, the agency expects the company’s free cash to reach $900 million in 2019.
Although the company belongs to a highly-competitive industry, its strong distribution capabilities form a large direct sales force and partner network along with integration of the majority share of its payments services with software applications, which give it a high competitive advantage.
The positive outlook of the ratings reflects Moody’s expectation for Global Payments' high revenue growth and a rising free cash flow.
Shares of the company have rallied 18.1% in a year’s time, underperforming its industry’s growth of 23.6%. It holds a Zacks Rank #2 (Buy).
Stocks to Consider
A few better-ranked stocks from the same sector are Cardtronics PLC CATM, WEX Inc. WEX and FleetCor Technologies, Inc. FLT.
Cardtronics offers automated consumer financial services through its network of automated teller machines and multi-function financial services kiosks. This Zacks Rank #1 (Strong Buy) player managed to deliver an average trailing four-quarter beat of 40.92%. You can see the complete list of today’s Zacks #1 Rank stocks here.
WEX provides corporate card payment solutions in North and South America, the Asia Pacific as well as Europe. The company currently carries a Zacks Rank #2 (Buy) and managed to witness an average trailing four-quarter earnings surprise of 2.97 %.
FleetCor Technologies provides commercial payment solutions in North America, Latin America, Europe and Australasia. Carrying a Zacks Rank of 2, the company came up with an average earnings surprise of 3.18% over the last three of four quarters.
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