A month has gone by since the last earnings report for Euronet Worldwide (EEFT). Shares have added about 6.5% in that time frame, underperforming 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 drivers.
Euronet Q2 Earnings Surpass Estimates, Tumble Y/Y
Euronet reported second-quarter 2020 earnings of 4 cents per share. The Zacks Consensus Estimate was of a loss of 33 cents. However, the bottom line fell 98% year over year due to weak segmental performances and business affected by the COVID-19 pandemic.
The company’s net loss of $2.18 per share in the second quarter came against net income of $1.25 of the prior-year quarter.
Total revenues were $527.8 million, down 24% from the year-ago quarter.
However, the top line beat the Zacks Consensus Estimate by 10.9%.
Operating loss of $101.3 million in the second quarter came against the operating income of $117.9 million in the prior-year period.
Total operating expenses of $629.1 million were up 9.6% year over year due to higher impairment of goodwill plus depreciation and amortization.
EFT Processing Segment’s total revenues plunged 66% (down 65% in constant currency) year over year due to lower transactions in Europe and the Asia Pacific. Adjusted EBITDA of ($14.8 million) dropped 116% (down 116% at cc) from the year-ago period. Operating loss of $56.6 million came against operating income of $76.5 million of the prior-year quarter.
The epay Segment’s total revenues inched up 2% year over year to $187.6 million (up 5% on constant currency basis). Adjusted EBITDA amounted to $19.7 million, increasing 2% from the year-earlier figure (up 6% on constant currency basis). Operating income of $18 million improved 2% year over year (up 7% on constant currency basis) on the back of digital media growth. Reported transactions were 585 million, up 59% year over year owing to better numbers across Europe and Brazil and robust contributions from India.
The Money Transfer Segment’s total revenues decreased 5% (down 4% at cc) year over year to $262.8 million. Adjusted EBITDA amounted to $36 million, reflecting a 17% decline (16% decrease at cc) from the prior-year quarter. Operating loss of $55.2 million came against the operating income of $35.3 million in the year-ago quarter. This segment’s total transactions of 25.8 million were down 11% year over year.
Corporate and Other Segment reported an expense of $7.5 million for the quarter, down 34.8% year over year.
Total assets at second-quarter end were $3.9 billion, down 14.9% from the level at 2019 end.
Cash and cash equivalents increased 10% to $864.9 million from the figure at 2019 end.
Debt obligations, net of current portion, were up 0.9% year over year to $1.1 billion from the level at 2019 end.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 51.09% due to these changes.
At this time, Euronet Worldwide has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
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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