Here's Why You Should Add Euronet (EEFT) to Your Portfolio
Euronet Worldwide, Inc. EEFT is currently aided by strong segmental contribution, an enhanced payment solutions suite, acquisitions and solid cash generation capabilities.
Zacks Rank & Price Rally
Euronet currently carries a Zacks Rank #2 (Buy).
The stock has gained 28.2% in the past three months compared with the industry’s 25.2% growth. The Zacks Finance sector and S&P 500 Composite have gained 18% and 15.5%, respectively, in the said time frame.
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Favorable Style Score
EEFT is well-poised for progress, as evidenced by its impressive VGM Score of A. Here, V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of all three factors.
Rising Estimates
The Zacks Consensus Estimate for Euronet’s 2023 earnings is pegged at $7.35 per share, indicating a 12.9% increase from the year-ago reported figure. The consensus mark for revenues is $3.7 billion, implying 9.2% growth from the year-ago number.
The Zacks Consensus Estimate for 2024 earnings is pegged at $8.29 per share, suggesting 12.8% growth from the 2023 estimate. The consensus mark for revenues is $4 billion, which indicates a rise of 7.8% from the 2023 estimate.
The bottom line of EEFT outpaced estimates in each of the trailing four quarters, the average surprise being 4.7%.
Solid Return on Equity
Euronet’s efficiency in utilizing shareholders’ funds can be substantiated by its return on equity of 24% as of Sep 30, 2023, which remains higher than the industry’s average of 19.8%.
Key Drivers
The top line of Euronet gained on the back of strong contributions from the EFT Processing, epay and Money Transfer segments. It improved 9.5% year over year in the first nine months of 2023. Management anticipates adjusted earnings per share to witness 10-15% year-over-year growth in 2024.
The EFT Processing segment is supported by improving domestic and international cash withdrawal transactions, better low-value point-of-sale transactions in Europe, and an increase in low-value payment processing transactions in the Asia Pacific. This segment processed total transactions of 6.1 million in the first nine months of 2023, which climbed 32% year over year.
The company believes there are many opportunities to expand in existing and new markets, posing this segment well for growth. EEFT expects to achieve $20 million in cost savings in 2024.
Consistent expansion of digital branded payments and mobile growth aids the performance of the epay segment, while higher U.S.-outbound transactions, direct-to-consumer digital transactions and international-originated money transfers drive the Money Transfer segment’s performance.
Euronet often resorts to acquisitions, which contribute to the growth of its business in the form of developing new products and services as well as expanding its geographical presence. The widespread adoption of contactless payments provides EEFT an opportunity to capitalize on through its innovative payment solutions.
An enhanced payment, transaction processing and distribution solutions suite makes it a favorite choice for partnerships with financial service providers, agents, retailers, merchants, content providers and individual consumers. In this regard, EEFT’s REN platform, which delivers an array of services comprising payment processing, card issuing, loyalty services, inventory management, fraud management and many more, deserves a special mention.
In November 2023, Euronet entered into a multi-year collaboration with the leading private bank of Ecuador, Banco Pichincha, to offer prepaid and debit card issuing and processing services to the bank. The delivery of these services will be made possible through software as a service installation of the REN platform.
A sound cash balance and solid cash-generating abilities bear testament to EEFT’s financial strength, based on which it can undertake business investments. It generated operating cash flows of $507.4 million in the first nine months of 2023, which improved 13.1% year over year from the prior-year comparable period.
Other Stocks to Consider
Some other top-ranked stocks in the broader Finance space are Alerus Financial Corporation ALRS, Navient Corporation NAVI and Finward Bancorp FNWD. Each stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for Alerus Financial’s 2023 earnings is pegged at $1.60 per share, which remained stable over the past week. ALRS beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 16.6%.
The Zacks Consensus Estimate for Navient’s 2023 earnings is pegged at $3.49 per share, indicating a 9.4% year-over-year increase. It has witnessed one upward estimate revision against none in the opposite direction during the past month. The consensus mark for NAVI’s revenues in 2023 is pegged at $964.7 million.
The Zacks Consensus Estimate for Finward’s 2023 earnings is pegged at $2.07 per share, which has improved 63% in the past 60 days. FNWD has witnessed one upward estimate revision against none in the opposite direction during this time.
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Euronet Worldwide, Inc. (EEFT) : Free Stock Analysis Report
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