Why Should You Retain Euronet (EEFT) in Your Portfolio Now?
Euronet Worldwide, Inc. EEFT is well poised for growth on the back of solid segmental performances, strategic initiatives and a sturdy balance sheet.
Over the past 30 days, it has witnessed its 2019 and 2020 earnings estimates move north 0.9% and 1%, respectively. This, in turn, reflects analysts' optimism on the stock.
The company boasts an encouraging earnings surprise history, having outpaced the Zacks Consensus Estimate in all the trailing four quarters, the average being 0.27%. This trend of consecutive beats underlines its operating efficiency.
Euronet recently delivered first-quarter 2019 earnings of 85 cents per share, beating the Zacks Consensus Estimate by 2.4% as well as rising 16.4% year over year on the back of double-digit contributions from all the segments. The company's revenues also shot up 4.9% from the prior-year quarter.
Its top-line improvement is consistently impressive to investors, evident from its 2013-2018 CAGR of 12.4%. The upside can be attributable to solid segmental results and the company’s diversity across products and geographies. In the first quarter of 2019, the stock’s rally continued with the metric rising 4.9% year over year, attributable to strong contributions from EFT Processing Segment and Money Transfer segment. We expect the company’s revenues to grow steadily because of its constant efforts to introduce products and services as well as penetrate new geographic locations.
Both its EFT and Money Transfer segments have been producing robust results over the past many quarters. The EFT segment has been contributing double-digit growth to the company’s portfolio on the back of its steady focus on deploying more devices across extended markets and its ability to develop an advanced technology for new products at both ATMs and POS terminals for optimizing and enriching customer experience. Notably, the Money Transfer business has been performing well through its physical and digital distribution channels. Sturdy deliveries of both these segments bode well for the company’s prosperity going forward.
The company’s robust growth strategy also deserves special mention. It widened its reach by launching the first outsourcing agreement in the Philippines with Security Bank and also introduced a bank-branded ATM network for Philippines Bank of Communication. The company exited the first quarter of 2019 with 42034 ATMs, up 9.6% year over year. Several initiatives, such as the ATM network participation agreement with ING Bank in Spain, Remitly, Ripple, etc. poise the company well for growth.
The company also enjoys a strong capital position, which should attract investors. Moreover, its cash and cash equivalents have been increasing from the past several years. The company has been successfully lowering its indebtedness over the past couple of years. This reflects its solid balance sheet status.
However, it has been witnessing rising operating expenses over the years, inducing margin contraction. This has also caused erosion of earnings per share. Its expenses might persistently escalate going ahead as the company consistently invests in technology and other expansion initiatives.
Its long-term earnings growth rate is expected at 13.3%, above the industry’s average of 9.4%, which is a positive for the company.
The Zacks Consensus Estimate for current-year earnings is pegged at $6.94, indicating an increase of 25.5% from the prior-year reported number on 12.1% higher revenues of $2.84 billion. For 2020, the Zacks Consensus Estimate for earnings stands at $8.13 on $3.2 billion revenues, implying a respective 17.1% and 11.4% rise from the year-ago reported figures.
Shares of this Zacks Rank #3 (Hold) company have soared 96.6% in a year’s time against its industry’s decline of 4.7%.
Stocks to Consider
Investors interested in the same space might look into a few better-ranked stocks like Global Payments Inc. GPN, WEX Inc. WEX and Cardtronics PLC CATM.
Global Payments offers payment technology and software solutions. It holds a Zacks Rank #2 (Buy). In the last four quarters, the company delivered average positive surprise of 3.11%.
WEX provides corporate card payment solutions in North and South America, the Asia Pacific as well as Europe. The company currently carries a Zacks Rank of 2 and managed to pull off average trailing four-quarter positive surprise of 2.12%.You can see the complete list of today’s Zacks #1 Rank stocks here
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 43.8%. It sports a Zacks Rank #1 (Strong Buy).
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