Global Payments: Look Beyond FX

Volatility in the currency markets had a big effect on second-quarter results. Global reported a $23 million reduction in revenues due to the strengthening of the U.S. dollar. The decrease was led by a reduction in the Canadian dollar vs. the U.S. dollar, as Canadian operations represented 20% of revenues during the second quarter. U.S. revenues (55% of the total) were up 9%, while Asia-Pacific revenues were up 30% and Europe revenues increased from $14.1 million to $71.2 million primarily due to a joint venture with HSBC (HCS - commentary - Cramer's Take) in the United Kingdom.

Global has given 2009 guidance of $1.55 billion to $1.58 billion for revenues and $2.14 to $2.21 for EPS. I suspect that as the recession continues, these numbers could move down a bit, but Global continues to take market share from competitors.

Also, with $120 million in cash and $350 million in an unused line of credit, Global will have a great opportunity to make key acquisitions in growth markets, which could make it a much stronger player coming out of the recession.

At 15.6 times the low end of 2009 EPS guidance, Global is a great franchise that is not particularly cheap. Long-term investors should look for any market selloffs to initiate a position.

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Know What You Own: Other business services stocks include Total System Services (TSS - commentary - Cramer's Take), Visa (V - commentary - Cramer's Take), MasterCard (MA - commentary - Cramer's Take), Thomson Reuters (TRI - commentary - Cramer's Take), IntercontinentalExchange (ICE - commentary - Cramer's Take) and Iron Mountain (IRM - commentary - Cramer's Take). For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

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At the time of publication, Gear had no positions in the stocks mentioned.

Steve Gear was director of capital markets at Stockhouse.