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MoneyGram (MGI) Q4 Earnings Miss Estimates on Higher Costs

DFS MGI MA V

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MoneyGram International Inc. (MGI - Free Report) reported fourth-quarter earnings of 16 cents per share, which missed the Zacks Consensus Estimate of 17 cents by 5.9%. Earnings remained flat with the prior-year quarter.

For 2016, the company’s adjusted EBITDA was $264.6 million, up 11% on a constant currency basis.

MoneyGram’s total revenue for the reported quarter was $416.2 million, up 3% on a reported basis and 4% on a constant currency basis. Both increases were on a year-over-year basis.

Total operating expenses increased 2.3% year over year to $393.3 million in the fourth quarter. For 2016, the metric totaled $1.5 billion, up 1.2% over 2015.

Quarterly Segment Details

Global Funds Transfer segment: Revenues were up 10.2% to $395.5 million. Growth in the segment’s revenues was driven by a 9.3% improvement in money transfer revenues to $369.9 million and a 1% increase bill payment revenues to $25.6 million. Total commissions expense rose 0.3% to $198.3 million. Operating margin of 6.5% expanded 330 basis points (bps) from the prior-year quarter. Digital money transfer revenues, which comprised 14% of the total money transfer revenue, jumped 16% year over year.

The Financial Paper Products segment: This segment reported total revenue of $19.6 million, up 0.3% year over year. The upside was driven by 0.3% rise in Official check revenues as the Money order revenues remained flat year over year at $12.6 million. Total commissions expense increased 1% to $1.2 million. Operating margin of 25%, however, contacted 140 bps from the prior-year quarter.

Financial Update:

As of Dec 31, 2016 MoneyGram had cash and cash equivalents of $157.2 million, down 4.4% from year-end 2015.

The company’s total assets grew 2% to $4.6 billion from year-end 2015.

The company exited the fourth quarter with $915 million of outstanding debt, down 3% from year-end 2015.

Adjusted Free Cash Flow was $96.7 million at the end of 2016, up $96.3 million from the prior year.

Moneygram International, Inc. Price, Consensus and EPS Surprise

 

Zacks Rank

Currently, MoneyGram carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Sector Participants

The bottom line at Discover Financial Services (DFS - Free Report) , MasterCard Incorporated (MA - Free Report) and Visa Inc. (V - Free Report) beat their respective Zacks Consensus Estimate for the quarter ending Dec 31, 2016.

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