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Should You Hold Euronet Worldwide (EEFT) Stock for Now?
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Euronet Worldwide, Inc. (EEFT - Free Report) is well poised to grow on the back of digital efforts, global expansions and higher travel and entertainment-related spending. Its growing transaction volumes also bode well. However, rising operating costs can reduce its margin.
Euronet Worldwide — with a market cap of $4.5 billion — is a leading electronic payments provider. The company offers payment and transaction processing and distribution solutions to financial institutions, retailers, consumers and service providers. Based in Leawood, KS, EEFT has a significant global presence.
Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Trend in Estimates
The Zacks Consensus Estimate for Euronet Worldwide’s 2022 earnings is pegged at $6.34 per share, which has witnessed two upward revisions in the past 30 days against one in the opposite direction. EEFT’s earnings beat estimates in two of the last four quarters and missed twice.
Furthermore, the consensus mark for revenues is pegged at $3.4 billion for 2022, indicating a 12.2% rise from the year-ago reported figure.
Key Drivers
Improving transaction figures are good for Euronet Worldwide’s business. As international travel keeps recovering from the pandemic levels, its EFT Segment is expected to witness a strong performance. In the first nine months of 2022, the segment’s transactions processed jumped 50% year over year to 4,634 million. Similarly, the epay segment witnessed a 28% year-over-year increase in transactions in the first three quarters of 2022, while the Money Transfer segment recorded a 9% rise from the year-ago period.
Its geographic and product-diverse business is expected to play a crucial role in generating growth going ahead. With improving performance in the Asia-Pacific, EEFT’s Money Transfer business will likely continue prompting growth in physical and digital distribution networks. The cross-border payments in the Money Transfer segment are also expected to increase due to recovering tourism sector, thanks to relaxed COVID restrictions. EEFT’s Dandelion and REN payments solutions are likely to witness growing demand.
Euronet Worldwide’s strong inorganic growth strategy is impressive. Several initiatives, such as the ATM network participation agreements and the launch of card issuing products poise the company well for growth. Its purchase of Piraeus Bank's merchant-acquiring business in Greece is expected to continue boosting POS processing revenues. Further, in the third quarter, the company’s EFT business snapped up 500 non-branch ATMs from the Bank of the Philippine Islands. Also, it launched an independent ATM network in Estonia.
The company’s return on capital is witnessing steady improvement thanks to management’s constant efforts. EEFT’s return on capital currently stands at 9.96X and has more room to run with the 5-year median being 11.89X. During the first nine months ended Sep 30, 2022, net cash provided by operating activities jumped 47.4% from the prior-year comparable period’s level to $448.6 million. This is encouraging for investors as the significant rise indicates growing strength in operations.
Key Concerns
However, there are a few factors, which are impeding the stock’s growth lately.
Increasing operating costs are eating into the company’s profits. In the first nine months of 2022, the metric increased 7.8% year over year to $2.2 billion. Euronet Worldwide’s valuation also looks expensive at the current level. The company has a forward 12-month price-to-earnings ratio of 13.31X, higher than the industry average of 10.71X. However, given its long-term potential, highlighted by the growing digitalization of economies, investors might agree to pay the premium. We believe that a systematic and strategic plan of action will drive its long-term growth.
Headquartered in Sao Paulo, Brazil, XP is a leading financial products and services provider. The Zacks Consensus Estimate for XP’s 2022 bottom line is pegged at $1.42 per share, indicating a 22.4% year-over-year growth.
New York-based StoneX Group works as a global financial services network. The Zacks Consensus Estimate for SNEX’s current year bottom line is pegged at $9.52 per share, indicating 54.8% year-over-year growth.
Based in San Francisco, NerdWallet is a digital platform operator connecting individuals and businesses with financial products suppliers. The Zacks Consensus Estimate for NRDS’ 2022 earnings signals a 74.4% improvement from a year ago.
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Should You Hold Euronet Worldwide (EEFT) Stock for Now?
Euronet Worldwide, Inc. (EEFT - Free Report) is well poised to grow on the back of digital efforts, global expansions and higher travel and entertainment-related spending. Its growing transaction volumes also bode well. However, rising operating costs can reduce its margin.
Euronet Worldwide — with a market cap of $4.5 billion — is a leading electronic payments provider. The company offers payment and transaction processing and distribution solutions to financial institutions, retailers, consumers and service providers. Based in Leawood, KS, EEFT has a significant global presence.
Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Trend in Estimates
The Zacks Consensus Estimate for Euronet Worldwide’s 2022 earnings is pegged at $6.34 per share, which has witnessed two upward revisions in the past 30 days against one in the opposite direction. EEFT’s earnings beat estimates in two of the last four quarters and missed twice.
Euronet Worldwide, Inc. Price and EPS Surprise
Euronet Worldwide, Inc. price-eps-surprise | Euronet Worldwide, Inc. Quote
Furthermore, the consensus mark for revenues is pegged at $3.4 billion for 2022, indicating a 12.2% rise from the year-ago reported figure.
Key Drivers
Improving transaction figures are good for Euronet Worldwide’s business. As international travel keeps recovering from the pandemic levels, its EFT Segment is expected to witness a strong performance. In the first nine months of 2022, the segment’s transactions processed jumped 50% year over year to 4,634 million. Similarly, the epay segment witnessed a 28% year-over-year increase in transactions in the first three quarters of 2022, while the Money Transfer segment recorded a 9% rise from the year-ago period.
Its geographic and product-diverse business is expected to play a crucial role in generating growth going ahead. With improving performance in the Asia-Pacific, EEFT’s Money Transfer business will likely continue prompting growth in physical and digital distribution networks. The cross-border payments in the Money Transfer segment are also expected to increase due to recovering tourism sector, thanks to relaxed COVID restrictions. EEFT’s Dandelion and REN payments solutions are likely to witness growing demand.
Euronet Worldwide’s strong inorganic growth strategy is impressive. Several initiatives, such as the ATM network participation agreements and the launch of card issuing products poise the company well for growth. Its purchase of Piraeus Bank's merchant-acquiring business in Greece is expected to continue boosting POS processing revenues. Further, in the third quarter, the company’s EFT business snapped up 500 non-branch ATMs from the Bank of the Philippine Islands. Also, it launched an independent ATM network in Estonia.
The company’s return on capital is witnessing steady improvement thanks to management’s constant efforts. EEFT’s return on capital currently stands at 9.96X and has more room to run with the 5-year median being 11.89X. During the first nine months ended Sep 30, 2022, net cash provided by operating activities jumped 47.4% from the prior-year comparable period’s level to $448.6 million. This is encouraging for investors as the significant rise indicates growing strength in operations.
Key Concerns
However, there are a few factors, which are impeding the stock’s growth lately.
Increasing operating costs are eating into the company’s profits. In the first nine months of 2022, the metric increased 7.8% year over year to $2.2 billion. Euronet Worldwide’s valuation also looks expensive at the current level. The company has a forward 12-month price-to-earnings ratio of 13.31X, higher than the industry average of 10.71X. However, given its long-term potential, highlighted by the growing digitalization of economies, investors might agree to pay the premium. We believe that a systematic and strategic plan of action will drive its long-term growth.
Stocks to Consider
Some better-ranked stocks in the broader finance space are XP Inc. (XP - Free Report) , StoneX Group Inc. (SNEX - Free Report) and NerdWallet, Inc. (NRDS - Free Report) , all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Headquartered in Sao Paulo, Brazil, XP is a leading financial products and services provider. The Zacks Consensus Estimate for XP’s 2022 bottom line is pegged at $1.42 per share, indicating a 22.4% year-over-year growth.
New York-based StoneX Group works as a global financial services network. The Zacks Consensus Estimate for SNEX’s current year bottom line is pegged at $9.52 per share, indicating 54.8% year-over-year growth.
Based in San Francisco, NerdWallet is a digital platform operator connecting individuals and businesses with financial products suppliers. The Zacks Consensus Estimate for NRDS’ 2022 earnings signals a 74.4% improvement from a year ago.