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Why Is Euronet Worldwide (EEFT) Up 2.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Euronet Worldwide (EEFT - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Euronet Worldwide due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Euronet's Q2 Earnings in Line, Revenues Beat Estimates

Euronet Worldwide, Inc.’s second-quarter 2018 earnings of $1.32 per share were in line with the Zacks Consensus Estimate. While the bottom line improved 21% year over year.

The company’s reported net income declined 11.8% to 82 cents earnings per share in the quarter under review.

The company’s total revenues were $622.2 million, up 16% from the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate by 0.6%.

The second-quarter revenues reflect solid performances by the EFT Processing and Money Transfer segments, partially offset by the epay Segment due to the adoption of the Accounting Standards Codification Topic 606 (ASC 606).

Euronet’s total transactions were 968 million, increased 8% year over year.

Adjusted operating income increased nearly 27% to $52.9 million.

Segment Results

EFT Processing Segment’s total revenues grew 25% (18% on constant currency basis) year over year to $194.9 million on the back of increased transactions. Adjusted EBITDA amounted to $69.3 million, a rise of 26% (19% at constant currency) from the year-ago period. Operating income for the segment was $52.9 million, up 35% year over year.
The epay Segment’s total revenues inched up 1% year over year to $166.5 million (down 3% on a constant currency basis). This decrease was because of lower transactions in the quarter under review. Adjusted EBITDA amounted to $18.2 million, a 4% increase from the year-earlier quarter’s figure. This included a 2% decline on a constant currency basis. Operating income stand at $16.3 million, up 10% year over year.

The Money Transfer Segment’s total revenues increased 21% (17% at cc) year over year to $217.1 million, backed by 18% increase in transactions. Adjusted EBITDA amounted to $40.7 million, a 26% improvement (20% increase on constant currency basis) from the prior-year quarter. Operating income for this segment totaled $32.7 million, up 31% year over year.

Corporate and other Segment reported an expense of $11.5 million for the quarter under review.

Financial Update

Total assets at the quarter end were $3.4 billion, up 8.5% from the level at year-end 2017.

Cash and cash equivalents soared 42% to $1.2 billion from the figure at year-end 2017.

The company’s long-term debt decreased 8% to $372 million from the year-end count as of December 2017.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. In the past month, the consensus estimate has shifted 7.14% due to these changes.

VGM Scores

At this time, Euronet Worldwide has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is equally suitable for value, growth and momentum investors.

Outlook

Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise Euronet Worldwide has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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