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Analyst Blog

Shares of Euronet Worldwide Inc. (EEFT - Snapshot Report) hit an all-time new 52-week high of $53.60 on Aug 18, riding on a strong growth momentum. Notably, this leading electronic payment provider’s shares have risen 11.9% since the company reported second-quarter results at the end of July.

Euronet Worldwide also maintained its earnings streak in all the past 4 quarters, with an average beat of 11.3%. The momentum of this Zacks Rank #2 (Buy) stock has been driven by the company’s organic growth initiatives, adequate liquidity and competitiveness over other larger players.

Yesterday’s closing price represented a robust one-year return of about 44.9% against a return of 25.1% clocked by the Nasdaq index. Average volume of shares traded over the last three months stands at approximately 284.9K.

Earnings Review

On Jul 29, Euronet Worldwide reported second-quarter 2014 earnings per share (EPS) of 58 cents, higher than the Zacks Consensus Estimate of 50 cents and the year-ago quarter figure of 44 cents. This also marked the 6th straight quarter of solid double-digit growth.

High single-digit transactions growth and strong double-digit revenue growth in EFT processing and money transfer segments drove the top line, EBITDA, margins and operating cash flow. These were partly offset by a rise in expenses and debt, primarily owing to acquisition of the UK-based HiFX in May 2014.

Rationale

Euronet Worldwide’s is gaining strong synergies from consistent ATM network expansion and strong demand for value-added competitive digital products. The company is also increasing focus to bolster the sales of non-mobile content and sustained sales of higher-margin products.

Moroever, Euronet Worldwide is boosting its organic growth capacities through its Walmart (WMT - Analyst Report) alliance and HiFX acquisition. This acquisition has expanded the company’s international money transfer offerings to high-income individuals and small-to-medium sized businesses. It also fits in with Euronet Worldwide’s existing Ria operations.

The company’s growth prospects has boosted investors’ sentiment as well. Management also remains optimistic, as reflected in its EPS projection of 73 cents in third-quarter 2014.

Meanwhile, one could also consider financial stocks like FleetCor Technologies Inc. (FLT - Snapshot Report), Equifax Inc. (EFX - Analyst Report) and WEX Inc. (WEX - Snapshot Report), all of which have the same Zacks Rank as Euronet Worldwide.

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