Global Payments reported a 1% increase in profits for the company’s third fiscal quarter. Profit attributable to the company reached $58.5 million, or $0.75 per share, up from $57.9 million, or $0.73 per share, in the year-earlier quarter. Excluding items such as acquisition intangible amortization expenses and costs related to the company’s security breach, quarterly earnings per share rose four cents to $0.87. We are not making changes to our fair value estimate of $51 per share or our narrow economic moat assessment at this time.
We liked the fact that the costs of the company’s security breach seem set to come under what we had been expecting, and we were encouraged by news that Global Payments was reinstated to the list of Payment Card Industry Data Security Standard-compliant service providers. We think this gives the company momentum toward putting the embarrassing hacking incident behind it, solidifying our belief that the security breach was something that, while damaging, wouldn’t permanently cripple the company or impair its moat. In the latest quarter, Global Payments saw an 8% top-line year-on-year gain to $578.7 million from $533.5 million. Looking forward, the company’s performance in its Canada operation remains an open question.
The latest quarter definitely saw further weakness in Canada, where Global Payments has been hurt by issues such as weaker pricing. In the latest quarter, Canada’s contribution to the top line fell 6% to $72.2 million. Canadian revenue, which makes up about 13% of Global Payments’ overall revenue, has tracked below our expectations, and we will take a closer look at our estimates. The company expects the situation to improve in the fiscal fourth quarter, and we think conditions should get better over time, though we are not expecting extremely positive performance from Canada in the near term. Revenue performance in the other regions has tracked closer to our expectations. Return on average equity for the quarter was nearly 20% annualized.
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