Euronet Up Above 56% in a Year: More Room for Upside Left?

Euronet Worldwide, Inc. EEFT has been favored by investors on the back of revenue growth and inorganic strategies.

The company recently delivered second-quarter 2019 earnings of $1.69 per share, up 28% year over year.  This upside can mainly be attributed to higher segmental revenue contributions.  

In a year’s time, this Zacks Rank #2 (Buy) company has soared 56.2% against the industry’s decline of 5.3%.

We expect this momentum to continue as it gains from the following factors:

Consistent Revenue Growth: Euronet’s top-line improvement has been impressive, witnessing a CAGR of 12.4% during the 2013-2018 period on solid segmental results and the company’s diversity across products and geographies. This uptick in revenues continued in the first half of 2019 with the metric rising 22.4% year over year owing to solid contributions from EFT Processing and Money Transfer segments. With more products and services as well as new and exciting geographic options at its disposal, Euronet is well-positioned to maintain strong growth rates going forward.

Expansion and Strategic Initiatives: The company’s growth strategy worked to its advantage. It exited the second quarter of 2019 with 46636 ATMs, up 13.2% year over year. Several initiatives, such as the ATM network participation agreement with ING Bank in Spain, Remitly, Ripple, Alipay, etc. bode the company well for growth.

Strong Balance Sheet: Euronet’s solid balance sheet position also impresses. Its debt to equity ratio is 106.3%, comparing favorably with the industry’s 187.1%. Moreover, its times interest earned, a ratio measuring the ability to pay interest expenses, has improved from 6.7X in 2015 to 8.8X in 2018. Its cash and cash equivalents have been increasing from the past several years. The company has been successfully lowering its debt over the past couple of years. This, in turn, reflects its solid finances.

Other Key Factors

Its return on equity — a profitability measure — stands at 26.3%, higher than the industry average of 22%.

The company’s long-term growth rate came in at 13.3%, which is also a positive as it surpasses the industry average of 7.6%.

Euronet has an impressive Growth Score of B, which analyzes its growth prospects.

Other Stocks to Consider

Investors interested in the finance sector may also consider some other top-ranked stocks like Visa Inc. V, Cardtronics PLC CATM and PayPal Holdings, Inc. PYPL. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Visa works as a payments technology company worldwide. It pulled off average four-quarter positive surprise of 3.4% and has a Zacks Rank of 2.

Cardtronics offers automated consumer financial services through its network of automated teller machines and multi-purpose financial services kiosks. The company came up with average four-quarter beat of 37.5% and sports a Zacks Rank #1.

PayPal works as a technology platform and a digital payments company. It delivered average four-quarter positive surprise of 10.4% and is Zacks #2 Ranked.


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

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