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Analyst Blog

Driven by a strong momentum, shares of Euronet Worldwide Inc. (EEFT - Snapshot Report) hit an all-time new 52-week high of $50.05 on Jul 1. Notably, this leading electronic payment provider’s shares have risen 12.4% since the company reported first-quarter results at the end of April.

Euronet Worldwide also witnessed an earnings streak in all the past 4 quarters, with an average beat of 11.2%. The momentum of this Zacks Rank #1 (Strong Buy) stock has been driven by the company’s active organic growth initiatives that are expected to improve outlook going forward.

Yesterday’s closing price represented a robust one-year return of about 55.6% against a return of 31.0% clocked by the Nasdaq index. Average volume of shares traded over the last three months stands at approximately 312.1K.

Earnings Review

On Apr 29, Euronet Worldwide reported first-quarter 2014 earnings per share (EPS) of 46 cents, higher than the Zacks Consensus Estimate of 41 cents and the year-ago quarter figure of 38 cents.

Higher transactions as well as double-digit revenue growth in EFT processing and money transfer segments drove the top line, margins and operating cash flow. These were partly offset by a rise in expenses and debt.

Rationale

Euronet Worlwide is benefiting from the recent launch of digital products, the Walmart alliance and sustained sales of higher-margin products. The acquisition of the UK-based HiFX in May 2014 will further expand the company’s international money transfer offerings to high-income individuals and small-to-medium sized businesses. It also fits in with Euronet Worlwide’s existing Ria operations.

Such core growth improvement, adequate liquidity and competitiveness against larger players are impressive. These positivesinstill confidence in investors about the company’s growth prospects. Management also remains optimistic, as reflected in its EPS projection of 57 cents in second-quarter 2014.

Meanwhile, one could also consider financial stocks like Ladder Capital Corp. (LADR - Snapshot Report), Global Cash Access Holdings Inc. (GCA - Snapshot Report) and VeriFone Systems Inc. (PAY - Analyst Report), all of which sport the same Zacks Rank as Euronet Worlwide.

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