Shares of payment processor and money transfer firm Global Payments (NYSE:GPN) have been on a wild ride in the past year, as some investors bailed on the stock after growth came in lower than they were expecting. The stock has recovered somewhat as of late, and first-quarter results released tomorrow will shed light on whether Global Payments is set for further highs or another dip below $40 per share.

What analysts say:

  • Buy, sell, or waffle? Twenty-three analysts follow Global Payments; 16 are bullish on the stock, while seven have hold ratings. The Motley Fool CAPS community has given Global Payments a four-star rating (out of five stars).
  • Revenue. Analysts are projecting $294.6 million in first-quarter sales for about 13% year-over-year growth. 
  • Earnings. Analysts expect quarterly earnings of $0.50, or 7.4% below the $0.54 reported in the same quarter last year.

What management says:
Back when Global Payments announced fourth-quarter results, management said it expected fiscal 2008 sales of $1.168 billion to $1.220 billion, or 10% to 15% ahead of fiscal 2007. It is also projecting full-year diluted earnings of $1.85 to $1.94, for 5% to 10% annual growth.

What management does:
Global Payments has grown sales about 18% each year over the past five years, and despite growth concerns earlier this year, the company throws off ample amounts of free cash flow due to low annual capital spending to maintain and grow the business. Double-digit net margins also speak to the profitability of Global Payments' business model. 

Margins

2/06

5/06

8/06

11/06

2/07

5/07

Gross

59.3%

60.8%

61.5%

61.2%

61.1%

60.9%

Operating

22.3%

22.6%

22.8%

22.0%

21.5%

20.8%

Net

13.1%

13.8%

14.4%

14.2%

14.1%

13.5%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Global Payments is a "leading payment processing and consumer money transfer company" that closely resembles First Data Corp. before it broke itself into two companies. As of Tuesday, First Data is no longer public, having been taken private by private equity groups for a hefty premium for shareholders. Western Union (NYSE:WU) remains available for investors and is the leading money transfer brand. Global Payments' DolEx brand is a much smaller player, as is MoneyGram (NYSE:MGI), but each benefits from a service business that requires low-maintenance spending.

The payment processing business has similar dynamics; it works with merchants, financial institutions, and credit card companies. Despite the near-term growth concerns, Global Payments is highly profitable, has no long-term debt, and should be able to substantially expand its $1 billion in annual sales. 

For more related Foolishness:

Western Union is an Inside Value recommendation. Try out a free 30-day trial subscription to see whether bargain-hunting is right for you.

Fool contributor Ryan Fuhrmann is long shares of Western Union, but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.