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Why Shares of Euronet Worldwide Fell 13% in December


What happened

Stock in global-transaction specialist Euronet Worldwide (NASDAQ: EEFT) fell 12.9% in the month of October, according to data from S&P Global Market Intelligence .

So what

Euronet shares succumbed to the malaise of the broader market last month, a period in which the S&P 500 index and the NasdaqComposite index each lost roughly 9%. Euronet's beta of 0.80 indicates that it's typically less volatile than the S&P 500, which, as a benchmark for the broader market, carries a beta of 1. So it's perhaps surprising that the EEFT symbol sold off more than the aggregate equities market last month.

But to provide a bit of context, Euronet stock handily outpaced the market for most of the year. Thus, investors appear to have locked in some of their profits last month as the overall environment for equities destabilized:

EEFT Chart

EEFT data by YCharts.

The sharp drop notwithstanding, Euronet relayed positive news to shareholders near year-end, announcing on Dec. 17 that it's signed an agreement with Banco de Moçambique, the central bank of Mozambique, to provide the country with "a modernized national payment network solution."

The agreement calls for Euronet to supply state-of-the-art software to enhance Mozambique's financial system. The company's services will encompass transactions processing, ATM and point-of-sale device adoption, and a broad array of mobile-payment solutions including bill payments and the introduction of digital wallets for consumer use.

The deal represents an important win for Euronet Worldwide (financial terms have not yet been disclosed). While most of its revenue and earnings are driven by ATM usage in Europe and Asia alongside a global remittances business, Euronet has an opportunity to utilize its technical prowess to deliver higher-margin consulting and service implementations to corporations and governments. The agreement with Mozambique's central bank also will likely result in some ongoing recurring revenue for Euronet as it gradually installs ATMs and provides financial services to consumers through its mobile and digital-services segment known as "ePay."

Close-up of woman inserting card into an ATM machine.

Image source: Getty Images.



Now what

Euronet's transaction volumes improved throughout 2018 and resulted in double-digit year-over-year revenue expansion in the third quarter of last year. Shareholders curious abou t earnings momentum heading into 2019 won't have long to wait: The company will issue its report on the final three months of 2018 in the first week of February.

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Asit Sharma has no position in any of the stocks mentioned. The Motley Fool recommends Euronet Worldwide. The Motley Fool has a disclosure policy .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




This article appears in: Personal Finance , Stocks
Referenced Symbols: EEFT



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