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Euronet Worldwide (EEFT) Up 17.5% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Euronet Worldwide (EEFT - Free Report) . Shares have added about 17.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Euronet Worldwide due for a pullback? 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 catalysts.

Euronet’s Q4 Earnings Beat Estimates, Increase Y/Y

Euronet delivered fourth-quarter 2018 earnings of $1.37 per share, beating the Zacks Consensus Estimate by 13.2%. Moreover, the bottom line improved 28% year over year.  This upside can mainly be attributed to double-digit revenues and adjusted EBITDA from the company’s segments apart from a beneficial income tax expense.  

The company’s reported net income soared 150% to $1.10 earnings per share in the quarter under review.

Its total revenues were $649.4 million, up 7% from the year-ago quarter due to solid contributions by EFT Processing Segment as well as Money Transfer segment. However, the top line missed the Zacks Consensus Estimate by 2.2%.

Euronet’s total transactions were 2.85 million, having increased 15% year over year.

Adjusted operating income rose nearly 15% to $84.8 million.

Segment Results

EFT Processing Segment’s total revenues grew 10% (15% at constant currency basis) year over year to $161.3 million on the back of higher transactions and a rise in operated ATMs. Adjusted EBITDA amounted to $46.4 million, up 12% (14% at constant currency basis) from the year-ago period. Operating income for the segment was $22.4 million, down 13% year over year (declined 12% on constant currency basis).

The epay Segment’s total revenues dipped 3% year over year to $215 million (no change on constant currency basis). Adjusted EBITDA amounted to $30.7 million, up 12% improvement from the year-earlier quarter’s figure (16% up on constant currency basis). Operating income stands at $29.3 million against year-ago quarter’s operating loss of $6.3 million. This segment reported transactions of 344 million, up 21% year over year.

The Money Transfer Segment’s total revenues climbed 15% (17% at constant currency basis) year over year to $274.1 million, backed by 15% higher transactions. Adjusted EBITDA amounted to $44.6 million, reflecting a 21% improvement (23% increase at constant currency) from the prior-year quarter. Operating income for this segment totaled $29.3 million, up 1% at constant currency. This segment reported total transactions of 28.5 million, up 15% year over year.

Corporate and other Segment reported an expense of $9.8 million for the quarter under review, up from the year-ago period’s expense of $7.6 million.

Full-Year Highlights

For the full year, revenues augmented 13% year over year to $2.5 billion (up 10% constant currency basis).

Adjusted operating income of the company totaled $371.6 million, depicting a rise of 22% year over year (18% at constant currency basis). Its adjusted EBITDA came in at $494.4 million, a 19% increase from 2017’s figure (16% at constant currency basis).

Net income of the company was $4.26 per share, up 45.5% from 2017’s figure.

Adjusted earnings per share were $5.53, up 21% year over year.

Q1 Guidance

Euronet expects adjusted earnings per share to be nearly 83 cents per share in the first quarter of 2019, better than the Zacks Consensus Estimate of 79 cents.

Financial Update

Total assets at fourth-quarter end were $3.3 billion, up 5.8% from the level at year-end 2017.

Cash and cash equivalents improved nearly 29% to $1.1 billion from the figure at 2017 end.

The company’s total indebtedness decreased 27.8% to $641.5 million from the count as of Sep 30, 2018.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted 6.18% due to these changes.

VGM Scores

At this time, Euronet Worldwide has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Euronet Worldwide has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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