A month has gone by since the last earnings report for Euronet Worldwide (
EEFT Quick Quote EEFT - Free Report) . Shares have lost about 0.9% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Euronet Worldwide due for a breakout? 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 drivers.
Euronet Q4 Earnings Beat Mark on Segmental Strength
Euronet Worldwide, Inc. reported fourth-quarter 2022 adjusted earnings of $1.39 per share, which outpaced the Zacks Consensus Estimate by 14.9% and our estimate of $1.20. The bottom line improved 21% year over year.
Total revenues amounted to $865.7 million, which rose 7% year over year or 16% on a constant-currency basis in the quarter under review. The top line beat the consensus mark by a whisker and our estimate of $855 million.
The quarterly results received an impetus from recovering international travel, expanding physical and digital distribution networks coupled with a robust pipeline for Euronet’s Dandelion solution. However, the upside was partly offset by elevated operating tax expense as well as inflationary pressure leading to a rise in salary expense.
Euronet reported a net income of $1.31 per share in the fourth quarter against the prior-year quarter’s loss of 6 cents. Operating income of $79.1 million increased nearly three-fold year over year and came higher than our estimate of $63.1 million.
Total operating expenses inched up 0.5% year over year to $786.6 million but lagged our estimate of $791.9 million. The increase was due to a rise in direct operating costs, salaries and benefits, and selling, general and administrative expenses.
Adjusted EBITDA came in at $127 million, up 12% year over year in the quarter under review and also higher than our estimate of $125.5 million.
EFT Processing segment recorded revenues of $210.1 million, which climbed 29% year over year (up 43% on a constant currency basis). However, the figure fell shy of the Zacks Consensus Estimate of $219 million and our estimate of $225.7 million.
Adjusted EBITDA of $43.4 million soared 68% year over year or 85% on a constant-currency basis in the fourth quarter but lagged our estimate of $51.4 million.
The segment’s operating income increased nearly 11-fold year over year to $19.1 million, Total transactions of 1,825 million rose 43% year over year in the quarter under review quarter but missed the consensus mark of 1,896 million.
The segmental performance benefited on the back of improved domestic and international withdrawal transactions resulting from the continued rebound in travel and growing point-of-sale processing revenues. Substantial volume increase in low-priced payment processing transactions within the Asia Pacific also accounted for the impressive segmental performance.
epay segment’s revenues dipped 0.5% year over year but rose 9% on a constant-currency basis to $285.5 million in the fourth quarter. The figure beat the Zacks Consensus Estimate of $284 million and our estimate of $262.7 million.
Adjusted EBITDA of $42.6 million remained flat year over year but advanced 11% year over year. The metric came higher than our estimate of $32.9 million.
Operating income increased 1% year over year or 12% on a constant-currency basis to $41.1 million in the quarter under review.
Transactions totaled 941 million, which rose 10% year over year but were lower than the consensus mark of 1,074 million.
Growth in digital branded payments, an expanding digital distribution channel and mobile growth contributed to the sound segmental performance.
Money Transfer segment reported revenues of $372.1 million, which advanced 2% year over year (up 9% on a constant-currency basis) in the fourth quarter. The figure outpaced the Zacks Consensus Estimate of $364 million and our estimate of $368.4 million.
Adjusted EBITDA decreased 4% year over year but improved 5% on a constant-currency basis to $48.1 million, lower than our estimate of $48.3 million.
Operating income of $39.9 million increased nearly 15-fold year over year in the quarter under review. Total transactions rose 10% year over year to 39.4 million, higher than the consensus mark of 38.9 million.
The solid segmental results were aided by 13% growth in each of its U.S.-outbound transactions and international-originated money transfers.
Corporate and Other’s expenses of $21 million escalated 30.4% year over year due to elevated short and long-term compensation expenses.
Financial Update (as of Dec 31, 2022)
Euronet exited the fourth quarter with cash and cash equivalents of $1,131.2 million, which fell 10.3% from the figure in 2021 end. Total assets of $5,403.6 million increased 13.9% from the 2021-end level.
Debt obligations, net of the current portion, came in at $1,609.1 million. The figure advanced 13.3% from the level as of Dec 31, 2021.
Equity of $1,244.4 million dipped 0.9% from the 2021-end level.
There was roughly $740 million left under Euronet’s revolving credit facilities at the fourth-quarter end.
In 2022, Euronet’s adjusted earnings of $6.51 per share surged 76% year over year. Total revenues climbed 12% year over year or 22% on a constant-currency basis to $3,358.8 million.
Operating income of $385.4 million more than doubled year over year in 2022.
Adjusted EBITDA climbed 43% year over year to $565.3 million. Revenues from the EFT Processing and Money Transfer segments witnessed year-over-year increases of 56% and 3%, respectively, in 2022. However, the same for the epay segment dipped 1% year over year in the same time frame.
Management anticipates adjusted earnings to be around 85 cents per share in the first quarter of 2023, which indicates an improvement of 23% from the reported figure in the first quarter of 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
The consensus estimate has shifted -5.65% due to these changes.
At this time, Euronet Worldwide has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Euronet Worldwide has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.