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MoneyGram (MGI) Down 20.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for MoneyGram (MGI - Free Report) . Shares have lost about 20.3% in that time frame, underperforming the S&P 500.

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

MoneyGram Q2 Earnings Beat Estimates, Revenues Down Y/Y

MoneyGram reported adjusted income of 1 cent per share, which compared unfavorably with the Zacks Consensus Estimate of a loss of 11 cents. The bottom line, however, plunged 91.7% year over year.

The company’s total revenues of $280 million dropped 14% year over year. The downside mainly resulted from a decline in fee and other revenues along with investment revenues.

Among the components of revenues, fees and other revenues declined 10.9% to $275.5 million while investment revenues dipped 70.3% to $4.3 million.

Segments in Detail

In the Global Funds Transfer segment, total revenues decreased 11.2% year over year to $263.9 million. Within the segment, money transfer revenues fell 10.3% year over year to $253.1 million and Bill payment revenues also slid 28% year over year to $10.8 million. Operating margin improved 440 basis points from the year-ago quarter to 6.3%.

The Financial Paper Products segment reported total revenues of $15.9 million, down 40.2% year over year due to a 20.6% decline in money order revenues and a 60.8% slip in official check revenues. Operating margin improved 140 bps from the year-ago quarter to 39%.

Liquidity

The company ended the quarter with cash and cash equivalents of $130.6 million, down 11% from the level at 2019 end.

During the quarter, the company’s free cash flow was $24.7 million, up 24% year over year.

As of Jun 30, 2020, the company had payment service obligation of $3.5 billion, up 8.2% from the level at 2019 end.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 115.63% due to these changes.

VGM Scores

Currently, MoneyGram has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 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.

Outlook

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


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