Global Payments Has Swung Back To Its Normal (Aggressive) Valuation

Back in February, I thought investors had a rare opportunity to buy the high-quality, growing card acquirer and processor Global Payments (NYSE:GPN) at a discount to fair value. Since then, the shares have shot up about 40% - beating peers like Square (NYSE:SQ), PayPal (NASDAQ:PYPL), First Data (NYSE:FDC), and Vantiv (NYSE:VNTV) and more than doubling the return of the S&P 500.

I continue to believe that there are attractive synergy opportunities with the acquisition of Heartland, and I likewise believe that Global Payments has legitimate growth opportunities in the U.S. through integrated payments and overseas through underlying growth in card-based payments.

That said, valuation has returned to a more normal, aggressive, level and I struggle to see where the value lies here now. While I grant that the market loves to pay up for growth and Global Payments is likely to generate impressive growth for years to come, I just don't see the value given the growth expectations and the intensity of competition.

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Global Payments Has Swung Back To Its Normal (Aggressive) Valuation