Visa (NYSE:V) vs. Global Payments (NYSE:GPN) Financial Survey

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Visa and Global Payments, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Visa	0	5	17	4	2.96
Global Payments	0	15	7	2	2.46

Visa currently has a consensus price target of $400.00, indicating a potential upside of 19.72%. Global Payments has a consensus price target of $103.90, indicating a potential upside of 38.64%. Given Global Payments’ higher probable upside, analysts clearly believe Global Payments is more favorable than Visa.

Risk and Volatility

Visa has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500. Comparatively, Global Payments has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500.

Valuation & Earnings

This table compares Visa and Global Payments”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Visa	$40.00 billion	15.22	$20.06 billion	$10.21	32.72
Global Payments	$10.08 billion	1.76	$1.57 billion	$7.12	10.53

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Visa	50.15%	60.31%	23.46%
Global Payments	15.07%	12.47%	5.97%

Dividends

Visa pays an annual dividend of $2.68 per share and has a dividend yield of 0.8%. Global Payments pays an annual dividend of $1.00 per share and has a dividend yield of 1.3%. Visa pays out 26.2% of its earnings in the form of a dividend. Global Payments pays out 14.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Visa has raised its dividend for 17 consecutive years. Global Payments is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

82.2% of Visa shares are held by institutional investors. Comparatively, 89.8% of Global Payments shares are held by institutional investors. 0.1% of Visa shares are held by company insiders. Comparatively, 1.0% of Global Payments shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Visa beats Global Payments on 12 of the 18 factors compared between the two stocks.

About Visa

Visa Inc. operates as a payment technology company in the United States and internationally. The company operates VisaNet, a transaction processing network that enables authorization, clearing, and settlement of payment transactions. It also offers credit, debit, and prepaid card products; tap to pay, tokenization, and click to pay services; Visa Direct, a solution that facilitates the delivery of funds to eligible cards, deposit accounts, and digital wallets; Visa B2B Connect, a multilateral business-to-business cross-border payments network; Visa Cross-Border Solution, a cross-border consumer payments solution; and Visa DPS that provides a range of value-added services, including fraud mitigation, dispute management, data analytics, campaign management, a suite of digital solutions, and contact center services. The company also provides acceptance solutions, which include Cybersource that provides modular and value-added services for connecting merchants to payment processing; risk and identity solutions, such as Visa Advanced Authorization, Visa Secure, Visa Risk and Decision Manager, Visa Consumer Authentication Service, and payment-decisioning solutions for fraud prevention; and Visa Consulting and Analytics, a payment consulting advisory services. It provides its services under the Visa, Visa Electron, Interlink, V PAY, and PLUS brand names. The company serves merchants, financial institutions, and government entities. Visa Inc. was founded in 1958 and is headquartered in San Francisco, California.

About Global Payments

Global Payments Inc. provides payment technology and software solutions for card, check, and digital-based payments in the Americas, Europe, and the Asia-Pacific. It operates through two segments, Merchant Solutions and Issuer Solutions. The Merchant Solutions segment offers authorization, settlement and funding, customer support, chargeback resolution, terminal rental, sales and deployment, payment security, and consolidated billing and reporting services. This segment also provides an array of enterprise software solutions that streamline business operations of its customers in various vertical markets; and value-added solutions and services, such as point-of-sale software, analytics and customer engagement, payroll and reporting, and human capital management. The Issuer Solutions segment offers solutions that enable financial institutions and retailers to manage their card portfolios through a platform; and commercial payments, account payables, and electronic payment alternatives solutions for businesses and governments. It 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. The company was founded in 1967 and is headquartered in Atlanta, Georgia.