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Euronet (EEFT) Stock Soars 46.6% YTD: Further Upside Left?

Zacks Equity Research

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

The company recently delivered third-quarter 2019 earnings of $2.84 per share, up 31.5% year over year.  This upside can mainly be attributed to higher segmental revenue contributions. Euronet’s total revenues of $787 million were also up 10.1% from the year-ago quarter.

This Zacks Rank #3 (Hold) company’s shares have surged 46.6% year to date, outperforming its industry's growth of 19.5%. Strong segmental performances and accretive acquisitions should continue to drive the stock.

Its return on equity — a profitability measure — came in at 28.1%, higher than the industry's average of 22.3%.

We expect this momentum to continue, banking on the following factors:

This provider of payment and transaction processing and distribution solutions has been witnessing impressive top-line growth, evident from its 2013-2018 CAGR of 12.4%. This uptrend was owing to solid segmental results and diversity across products and geographies. 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.

The company’s growth strategy worked to its advantage. Certain strategic initiatives helped it expand its network and ATMs. Its Ria Money Transfer segment is well-poised for progress, riding high on alliances. Tie-ups with biggies like Amazon and Walmart also bode well.

Euronet’s EFT segment witnessed consecutive years of double-digit growth, backed by 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 the customer experience.

Money Transfer Segment is consistently generating growth in the physical and digital distribution channels. Certain acquisitions like HiFX And IME made by this segment should lead to long-term development.

Other Noteworthy Factors

The stock carries an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.  

The company’s long-term growth rate of 10% is a positive as it lies above the industry average of 9.4%.

Also, the company delivered a positive earnings surprise in all the last four quarters, the average being 2.9%.

The Zacks Consensus Estimate for the company’s 2019 and 2020 earnings indicates an improvement of 26.4% and 14.7%, respectively, from the year-ago reported figures.

Stocks to Consider

Investors interested in the finance sector may consider some better-ranked stocks like On Deck Capital, Inc. ONDK, AXA Equitable Holdings, Inc. EQH and Cardtronics PLC CATM, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

On Deck Capital operates an online platform for small business lending. It pulled off average four-quarter positive surprise of 8.3%.

AXA Equitable Holdings works as a diversified financial services company. The company came up with average four-quarter beat of 12.4%.

Cardtronics provides automated consumer financial services and delivered average four-quarter positive surprise of 28.8%.

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