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Here's Why You Should Hold Euronet (EEFT) in Your Portfolio
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Euronet Worldwide, Inc. (EEFT - Free Report) is in investors’ good books on the back of its strategic expansions, segmental contributions and rising digital transactions.
Over the past 60 days, the stock has witnessed its earnings estimates for 2020 being revised 26.3% upward, reflecting analysts' optimism on the stock.
It is well-placed for growth, evident from its favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
The company’s top-line improvement has also been impressive over time, witnessing a CAGR of 11.6% during the 2015-2019 forecast period on solid segmental results and its diversity across products and geographies. Although the metric declined in the first six months of 2020, we are hopeful that it will bounce back owing to a slew of product and service launches.
Euronet’s strong inorganic growth strategy worked in its favor. Several initiatives, such as the ATM network participation agreements and the introduction of card issuing products poise the company well for growth. The company recently unveiled money transfer services with the Austria Post along with a cash pick-up facility at more than 3,000 locations with PostFinance in Ukraine, reassigned agreements with the Indonesian Post for their 4,000 locations, etc. In the second quarter, Euronet signed an agreement with the Millennium Bank in Poland, Standard Chartered Bank in Pakistan and the Ohridska Bank in North Macedonia to name a few. All these initiatives bode well for the company.
The epay segment has also been performing well for the last many quarters. This epay division is chosen for managing monthly recurring billing between Microsoft and certain telecommunications retailers for the sales of Games Pass Ultimate and Xbox All Access subscriptions across the globe. As of Jun 30, 2020, the segment operated through a network of around 703,000 POS terminals, providing electronic processing of digital media and prepaid mobile airtime top-up services in Europe, the Middle East, the Asia Pacific, the United States and South America. In epay, some of the most significant product distribution expansions were enabled by mobile wallets.
Moreover, in the second quarter, digital transactions of the company soared 98% leading to a 120% increase year over year in June. By tapping new markets, the digital business skyrocketed 145% in July. The company took a few initiatives, such as expanding its digital media content in Australia that includes Uber, Netflix and Spotify. It also escalated its digital marketing spend by almost 100% in the second quarter.
Its EFT segment has been witnessing solid growth, driven by the company’s steady focus on deploying more devices across the extended markets and its ability to develop an advanced technology for new products at both ATMs and POS terminals for optimizing and enriching its customer experience. Although the segmental performance was dented to some extent in the first six months of 2020, EFT transactions gained momentum at the end of the June quarter. The company expects a significant recovery in 2021 for the EFT segment as travel resumes.
The Money Transfer segment is consistently delivering growth through the physical and digital distribution channels, acquisitions, etc., evident from its 2015-2019 CAGR of 13%. In the second quarter, the company launched Money Transfer services at more than 19,000 OXXO locations, a leading convenience store chain in Mexico and rolled out a solution to enable deposits in the bank accounts through Alipay wallets. It expanded its mobile app and online capabilities to reach 21 countries.
Ria Money's self-service transactions account for 24% of its international outbound transactions and 31% of its total volume. Ria Money is steadily partnering with post offices around the world.
The company took several initiatives to cut down on expenses. It achieved around $35 million worth cost savings in the second quarter along with additional quarterly savings of approximately $15 million. This, in turn, is expected to boost its margins going forward.
However, the company is persistently facing hurdles as money remittance dropped due to market volatility.
Other companies in the same space, such as Jefferies Financial Group Inc. (JEF - Free Report) , WEX Inc. (WEX - Free Report) and Synchrony Financial (SYF - Free Report) have also decreased 11.2%, 31.4% and 26.3% each in the same time frame.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.
Image: Bigstock
Here's Why You Should Hold Euronet (EEFT) in Your Portfolio
Euronet Worldwide, Inc. (EEFT - Free Report) is in investors’ good books on the back of its strategic expansions, segmental contributions and rising digital transactions.
Over the past 60 days, the stock has witnessed its earnings estimates for 2020 being revised 26.3% upward, reflecting analysts' optimism on the stock.
It is well-placed for growth, evident from its favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
The company’s top-line improvement has also been impressive over time, witnessing a CAGR of 11.6% during the 2015-2019 forecast period on solid segmental results and its diversity across products and geographies. Although the metric declined in the first six months of 2020, we are hopeful that it will bounce back owing to a slew of product and service launches.
Euronet’s strong inorganic growth strategy worked in its favor. Several initiatives, such as the ATM network participation agreements and the introduction of card issuing products poise the company well for growth. The company recently unveiled money transfer services with the Austria Post along with a cash pick-up facility at more than 3,000 locations with PostFinance in Ukraine, reassigned agreements with the Indonesian Post for their 4,000 locations, etc. In the second quarter, Euronet signed an agreement with the Millennium Bank in Poland, Standard Chartered Bank in Pakistan and the Ohridska Bank in North Macedonia to name a few. All these initiatives bode well for the company.
The epay segment has also been performing well for the last many quarters. This epay division is chosen for managing monthly recurring billing between Microsoft and certain telecommunications retailers for the sales of Games Pass Ultimate and Xbox All Access subscriptions across the globe. As of Jun 30, 2020, the segment operated through a network of around 703,000 POS terminals, providing electronic processing of digital media and prepaid mobile airtime top-up services in Europe, the Middle East, the Asia Pacific, the United States and South America. In epay, some of the most significant product distribution expansions were enabled by mobile wallets.
Moreover, in the second quarter, digital transactions of the company soared 98% leading to a 120% increase year over year in June. By tapping new markets, the digital business skyrocketed 145% in July. The company took a few initiatives, such as expanding its digital media content in Australia that includes Uber, Netflix and Spotify. It also escalated its digital marketing spend by almost 100% in the second quarter.
Its EFT segment has been witnessing solid growth, driven by the company’s steady focus on deploying more devices across the extended markets and its ability to develop an advanced technology for new products at both ATMs and POS terminals for optimizing and enriching its customer experience. Although the segmental performance was dented to some extent in the first six months of 2020, EFT transactions gained momentum at the end of the June quarter. The company expects a significant recovery in 2021 for the EFT segment as travel resumes.
The Money Transfer segment is consistently delivering growth through the physical and digital distribution channels, acquisitions, etc., evident from its 2015-2019 CAGR of 13%. In the second quarter, the company launched Money Transfer services at more than 19,000 OXXO locations, a leading convenience store chain in Mexico and rolled out a solution to enable deposits in the bank accounts through Alipay wallets. It expanded its mobile app and online capabilities to reach 21 countries.
Ria Money's self-service transactions account for 24% of its international outbound transactions and 31% of its total volume. Ria Money is steadily partnering with post offices around the world.
The company took several initiatives to cut down on expenses. It achieved around $35 million worth cost savings in the second quarter along with additional quarterly savings of approximately $15 million. This, in turn, is expected to boost its margins going forward.
However, the company is persistently facing hurdles as money remittance dropped due to market volatility.
Shares of this presently Zacks Rank #3 (Hold) player have lost 44% year to date, wider than its industry’s decline of 16.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other companies in the same space, such as Jefferies Financial Group Inc. (JEF - Free Report) , WEX Inc. (WEX - Free Report) and Synchrony Financial (SYF - Free Report) have also decreased 11.2%, 31.4% and 26.3% each in the same time frame.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.
These 7 were selected because of their superior potential for immediate breakout.
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