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Euronet (EEFT) Hits 52 Week High: Will the Rally Continue?

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On Feb 16, shares of Euronet Worldwide (EEFT - Free Report) touched a 52-week high of $151.63 before closing the session a tad lower at $148.41.

This upside is attributable to the company’s recently reported fourth-quarter 2020 results.

Euronet’s fourth-quarter adjusted earnings of $1.11 per share outpaced the Zacks Consensus Estimate by 54.2%. Total revenues of $706.6 million grew 2% from the year-ago quarter. The top line too beat the Zacks Consensus Estimate by 8.3%. Other factors like the rise in digital transactions also contributed to overall growth.

The company’s share price trend charted a solid trajectory in recent times, having appreciated 47.5% over the past six months against the 0.5% decline of the industry it belongs to and also surpassed the 17.1% rise of the Zacks S&P 500 composite.

What’s Driving This Outperformance?

Recently, the company entered into agreements to add eight more banks for ATM network participation services in Spain. This is part of Euronet’s ATM Network Participation Program, which bodes well for the company.
This latest move reinforces the company’s efforts to ramp up ATM consolidation across its countries of operations. The initiative also bolsters the company’s presence in Europe. With ATMs in around 30 countries and more than 40 network participation agreements in effect, Euronet remains well-poised to continue launching innovative solutions and cutting-edge technologies for boosting its ATM network.

The performance of its epay segment also impressed investors with revenues  improving 27% year over year to $276.1 million on the back of digital media and mobile growth. Transactions in the epay segment increased on the back of Germany and Brazil as well as very strong contributions from Asia. The Money Transfer Segment’s total revenues jumped 18% year over year to $331.6 million.

Ria Money is consistently partnering with post offices around the world. Kroger selected Ria Money as a second provider of money transfer services at its nearly 2000 sites across the United States. Ria Money’s international fund transfer grew 16% year over year in 2020, which is pretty impressive. In the December quarter, the same was up 24% year over year. Keeping in mind that the World Bank had predicted the global money transfer to decline 20% in 2020, Ria Money’s growth is commendable.

Euronet also launched payout services with the Indonesian Post. The company inked numerous deals such as, Piraeus Bank in Greece, the online marketplace Shoppy throughout Asia and Flipkart in India, et al. It also signed a contract with Vietcombank, one of the largest commercial banks in Vietnam to provide pass-through DCC services on it over a 1,000 ATMs.

Digital transactions of the company have been displaying an uptrend over the past few months. The company took a few initiatives, such as expanding its digital media content in Australia that includes Uber, Netflix and Spotify.

Further Upside Left?

Euronet’s enhanced product portfolio and an extending array of alternative global payout capabilities are likely to augur well for the long haul. Also, the growing popularity of contactless payments provides a perfect ground for the company to bank on its suite of innovative payments solutions.

Its solid capital position enables investment in business. Its total debt is 86.8% of its total equity (almost in line sequentially), which is significantly lower than the industry average of 142.1%. As of Dec 31, 2020, it had more than $1.4 billion in unrestricted cash and around $700 million available under its revolving line of credit. Taken together, its cash and credit facility is higher than its long-term debt of $1.4 billion. The company doesn’t have any significant debt service obligations in the next five years.

Its 2021 earnings estimate stands at 5.6%, indicating an upside of 97.2% from the year-ago reported figure.
 

Zacks Rank and Key Picks

The company carries a Zacks Rank #4 (Sell), currently.

Some better-ranked stocks in same space are WEX Inc. (WEX - Free Report) , Jefferies Financial Group Inc.(JEF - Free Report) and Virtu Financial, Inc. (VIRT - Free Report) . While Virtu Financial and Jefferies Financial sport a Zacks Rank #1 (Strong Buy), WEX holds a Zacks Rank #2 (Buy), presently. You can see the complete list of today’s Zacks #1 Rank stocks here.

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