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Euronet Worldwide (EEFT) Up 5.4% 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 5.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Euronet Q1 Earnings Surpass Estimates, Improve Y/Y

Euronet Worldwide delivered first-quarter 2019 earnings of 85 cents per share, beating the Zacks Consensus Estimate by 2.4%. Moreover, the bottom line improved 16.4% year over year.  This upside can mainly be attributed to double-digit contributions from all the segments.

The company’s reported net income was up 26.5% to 62 cents per share in the quarter under review.

Its total revenues were $577.5 million, up 4.9% from the year-ago quarter owing to solid contributions from EFT Processing Segment and Money Transfer segment. However, the top line missed the Zacks Consensus Estimate by 4.2%.

Euronet’s total transactions were 1.06 million, having increased 17% year over year.

Adjusted operating income rose nearly 23% to $56.1 million.

Segment Results

EFT Processing Segment’s total revenues grew 7% (16% at constant currency basis) year over year to $145.7 million on the back of higher transactions and a rise in operated ATMs. Adjusted EBITDA amounted to $33.4 million, up 21% (29% at constant currency basis) from the year-earlier period. Operating income for the segment was $16.8 million, up 46% year over year (up 54% on constant currency basis).

The epay Segment’s total revenues are flat at $176.1 million (up 6%atconstant currency). Adjusted EBITDA amounted to $19.8 million, up 5% improvement from the year-earlier quarter’s figure (13% up on constant currency basis). Operating income stands at $18 million, up 7% year over year (15% increase on constant currency basis). This segment reported transactions of 338 million, up 31% year over year.

The Money Transfer Segment’s total revenues climbed 7% (11% at constant currency) year over year to $256.6 million, backed by higher transactions. Adjusted EBITDA amounted to $38.8 million, reflecting a 13% rise (18% increase at constant currency) from the prior-year quarter. Operating income for this segment totaled $30.7 million, up 22% on constant currency basis. This segment reported total transactions of 26.6 million, up 10% year over year.

Corporate and other Segment reported an expense of $9.4 million for the quarter under review, same as the year-ago quarter’s number.

Q2 Guidance

Euronet expects adjusted earnings per share to be nearly $1.69 per share in the second quarter of 2019.

Financial Update

Total assets at first-quarter end were $3.8 billion, up 14.8% from the level at year-end 2018.

Cash and cash equivalents improved nearly 15.4% to $1.2billion from the figure at 2018 end.

The company’s total indebtedness increased 22.7% to $786.9 million from the count as of Dec 31, 2018.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Euronet Worldwide has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Euronet Worldwide has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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