GPN Or TSS: Which Is The Better Payments Processing Stock?
Zacks Investment Research | Mar 13, 2018 09:19PM ET
The Financial Transaction Services industry is undergoing a dynamic change. Technology and innovations are leading to changing consumer habits and driving growth opportunities in ecommerce, mobile payments, block chain technology and digital currencies.
As payments style shifts from cash and checks to plastic and electronic mode, demand for debit and credit cards and online payments continues to rise. An improving economy has also set a positive trend in consumer spending by increasing the number or average purchase amount of transactions involving payment cards and devices.
Moreover, the relaxation of tax rate under the Tax Cuts and Jobs Act is likely to increase consumers’ propensity to spend more.
Strong Economy Bodes Well
The U.S economy recently witnessed strong developments like a decline in jobless claims, low unemployment, etc, which reflect that the economy holds immense growth potential. Solid growth in wage has boosted overall consumer spending resulting from increased disposable income.
These favorable macroeconomic factors further boosted The Conference Board’s Consumer Confidence Index, which measures consumers’ attitude toward current and short-term economic conditions. This optimism encourages consumers to use their savings to make purchases, which is a positive sign for payment and network companies, which are the end-beneficiaries of rising consumer spending.
A Top-Ranked Industry
The Financial Transaction Services industry looks attractive from an investment perspective. The industry carries a Zacks Industry Rank #124 (top 47% out of more than 250 Zacks industries). Our back-testing shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than two to one.
Here we focus on two payment processors, Global Payments, Inc. (NYSE:GPN) and Total System Services, Inc. (NYSE:TSS) .
Global Payments is a leading worldwide provider of payment technology services that delivers innovative solutions globally with market capitalization of $15.84 billion. On the other hand, Total System, with market capitalization of $14.09 billion, is one of the world's largest companies for outsourced payment services, offering a broad range of issuer and acquirer-processing technologies that support consumer-finance, credit, debit, healthcare, loyalty and prepaid services for financial institutions and retail companies. Both of the stocks carry a Zacks Rank #2 (Buy). You can see Zacks Investment Research
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