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MoneyGram's (MGI) Debt Paydown Marks Another Growth Measure
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MoneyGram International Inc. reduced its debt load by paying off $100 million. The money raised from recent equity offering and partly from the company’s cash coffers was used for deleveraging.
The recent move highlights the company’s sincere efforts to bring down debt levels and resultantly, reduce the mounting interest burden. It has no significant debt maturities until 2023 and 2024. Even though interest expenses declined 6.3% in first-quarter 2021, the company carries a high debt level. As of Mar 31, 2021, the company’s cash and cash equivalents of $152.8 million lag its debt balance of $858.8 million.
Also, the company’s leverage ratio is persistently deteriorating, evident from its total debt to total capital of 143.2% at first-quarter end. The figure not only compared unfavorably with the 2020-end reading of 138.2% but also remained much higher than the industry’s average of 45.8%
The company is taking several strategic steps for long-term growth. Most important ones are rapid digital advancement, conclusion of deferred prosecution agreement (DPA) and a ramp-up of activities in money transfer business.
After suffering stiff competition, compliance-related issues, debt burden over the past any years, the company is gradually cruising toward growth, taking one step at a time.
MoneyGram started its digital transformation to survive amid an environment of fierce competition caused by the fintechs like Wise (formerly TransferWise), Square, Inc. (SQ - Free Report) , WorldRemit, PayPal Holdings, Inc. (PYPL - Free Report) and many others jostling for space. These companies moved money online in a jiffy and that too at low cost. Players like Western Union Co. (WU - Free Report) and MoneyGram with their business models ingrained in brick-and-mortar format took a severe blow from this wind of change. MoneyGram’s revenues have declined annually since 2017.
Revenues are expected to grow this year on the back of a huge business contribution from its digital platform. In the first quarter of 2021, revenues grew 7% year over year. At the end of March 2021, digital transactions accounted for 32% of all money transfer transactions.
The company expects its digital business to represent above 50% of all its money transfer transactions in 2024. To expand the same, it partnered with fintechs, banks, telcos and e-commerce sites to get access to customers looking to utilize MoneyGram services and global network. The company has a solid pipeline of new alliances that will further support growth of its digital platform.
Another feat achieved by the company is the receipt of a green flag from the regulators for having sufficient compliance in place. It built an industry-leading compliance program that includes customer ID verification standards, technology platforms and data-driven controls to cut consumer fraud rates to all-time lows. This will reflect the company’s quality of service and help attract customers to ultimately gain a plum market share.
MoneyGram also rolled out a new business line named MoneyGram as a Service, which breeds a significant growth opportunity in a market estimated to be worth $17 billion during 2024. Via this service, the company is looking to monetize its API-driven infrastructure, which enables instant access to 125 different currencies via its global cash network. This business will generate meaningful processing revenue streams in the years ahead.
MoneyGam is also eying international shores to diversify its revenues for offseting stiff competition prevalent in the U.S market. A substantial portion of total money transfer revenues comes from business generated outside of the United States.
This geographical and product diversification of revenues will make its business more resilient over time. The company carved a solid growth path and is improving its indebtedness, which will further provide it with stability.
Year to date, the stock has gained 255.2% compared with the industry’s growth of 15.6%.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second. Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
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MoneyGram's (MGI) Debt Paydown Marks Another Growth Measure
MoneyGram International Inc. reduced its debt load by paying off $100 million. The money raised from recent equity offering and partly from the company’s cash coffers was used for deleveraging.
The recent move highlights the company’s sincere efforts to bring down debt levels and resultantly, reduce the mounting interest burden. It has no significant debt maturities until 2023 and 2024. Even though interest expenses declined 6.3% in first-quarter 2021, the company carries a high debt level. As of Mar 31, 2021, the company’s cash and cash equivalents of $152.8 million lag its debt balance of $858.8 million.
Also, the company’s leverage ratio is persistently deteriorating, evident from its total debt to total capital of 143.2% at first-quarter end. The figure not only compared unfavorably with the 2020-end reading of 138.2% but also remained much higher than the industry’s average of 45.8%
The company is taking several strategic steps for long-term growth. Most important ones are rapid digital advancement, conclusion of deferred prosecution agreement (DPA) and a ramp-up of activities in money transfer business.
After suffering stiff competition, compliance-related issues, debt burden over the past any years, the company is gradually cruising toward growth, taking one step at a time.
MoneyGram started its digital transformation to survive amid an environment of fierce competition caused by the fintechs like Wise (formerly TransferWise), Square, Inc. (SQ - Free Report) , WorldRemit, PayPal Holdings, Inc. (PYPL - Free Report) and many others jostling for space. These companies moved money online in a jiffy and that too at low cost. Players like Western Union Co. (WU - Free Report) and MoneyGram with their business models ingrained in brick-and-mortar format took a severe blow from this wind of change. MoneyGram’s revenues have declined annually since 2017.
Revenues are expected to grow this year on the back of a huge business contribution from its digital platform. In the first quarter of 2021, revenues grew 7% year over year. At the end of March 2021, digital transactions accounted for 32% of all money transfer transactions.
The company expects its digital business to represent above 50% of all its money transfer transactions in 2024. To expand the same, it partnered with fintechs, banks, telcos and e-commerce sites to get access to customers looking to utilize MoneyGram services and global network. The company has a solid pipeline of new alliances that will further support growth of its digital platform.
Another feat achieved by the company is the receipt of a green flag from the regulators for having sufficient compliance in place. It built an industry-leading compliance program that includes customer ID verification standards, technology platforms and data-driven controls to cut consumer fraud rates to all-time lows. This will reflect the company’s quality of service and help attract customers to ultimately gain a plum market share.
MoneyGram also rolled out a new business line named MoneyGram as a Service, which breeds a significant growth opportunity in a market estimated to be worth $17 billion during 2024. Via this service, the company is looking to monetize its API-driven infrastructure, which enables instant access to 125 different currencies via its global cash network. This business will generate meaningful processing revenue streams in the years ahead.
MoneyGam is also eying international shores to diversify its revenues for offseting stiff competition prevalent in the U.S market. A substantial portion of total money transfer revenues comes from business generated outside of the United States.
This geographical and product diversification of revenues will make its business more resilient over time. The company carved a solid growth path and is improving its indebtedness, which will further provide it with stability.
Year to date, the stock has gained 255.2% compared with the industry’s growth of 15.6%.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>