Heartland Payment Systems (NYSE: HPY) and Global Payments (NYSE:GPN) are both mid-cap transaction & payment services companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.
Insider & Institutional Ownership
98.9% of Global Payments shares are held by institutional investors. 0.9% of Global Payments shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This is a summary of recent ratings and recommmendations for Heartland Payment Systems and Global Payments, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Heartland Payment Systems||0||0||0||0||N/A|
Global Payments has a consensus target price of $105.68, suggesting a potential upside of 3.89%. Given Global Payments’ higher probable upside, analysts clearly believe Global Payments is more favorable than Heartland Payment Systems.
Heartland Payment Systems pays an annual dividend of $0.40 per share and has a dividend yield of 0.4%. Global Payments pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. Heartland Payment Systems pays out 17.6% of its earnings in the form of a dividend. Global Payments pays out 2.2% 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. Heartland Payment Systems has increased its dividend for 6 consecutive years. Heartland Payment Systems is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
Heartland Payment Systems has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500. Comparatively, Global Payments has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500.
Valuation and Earnings
This table compares Heartland Payment Systems and Global Payments’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Heartland Payment Systems||N/A||N/A||N/A||$2.27||45.41|
|Global Payments||$2.90 billion||5.59||$271.66 million||$1.79||56.83|
Global Payments has higher revenue and earnings than Heartland Payment Systems. Heartland Payment Systems is trading at a lower price-to-earnings ratio than Global Payments, indicating that it is currently the more affordable of the two stocks.
This table compares Heartland Payment Systems and Global Payments’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Heartland Payment Systems||3.25%||27.90%||6.09%|
Global Payments beats Heartland Payment Systems on 8 of the 13 factors compared between the two stocks.
Heartland Payment Systems Company Profile
Heartland Payment Systems, Inc. is a United States-based company that provides payment processing services to merchants. The Company’s electronic payment processing services facilitate the exchange of information and funds between merchants and cardholders’ financial institutions. Its segments include Payment Processing, which offers card payment processing and related services to its small and medium-sized enterprise merchants and Network Services merchants; Campus Solutions, which offers payment processing, integrated commerce solutions, loan services and open- and closed-loop payment solutions to institutions of higher education; Heartland School Solutions, which offers school nutrition and point of sale solutions and associated payment solutions to K-12 schools; Heartland Payroll Solutions, which provides payroll processing and related tax filing services, and Other, including integrated payments solutions for small ticket merchants, and loyalty and gift card marketing solutions.
Global Payments Company Profile
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.
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