Euronet Worldwide, Inc. EEFT is well poised for growth on the back of solid segmental performances, strategic expansion and sturdy balance sheet. Over the past 30 days, the company’s earnings estimates for 2019 and 2020 have been revised upward by 0.9% and 2.2%, respectively. This reflects analysts' optimism on the stock.
The company has an encouraging earnings surprise history, having outpaced the Zacks Consensus Estimate in all of the trailing four quarters, the average beat being 2.68%. This trend of consecutive beats underlines its operating efficiency.
The company reported earnings of $1.37 per share in fourth-quarter 2018, beating the Zacks Consensus Estimate by 13.2%. Moreover, the bottom line improved 28% year over year. This upside can mainly be attributed to double-digit revenues and adjusted EBITDA from its segments, apart from lower income tax expenses. Its net income for the reported quarter soared 150% to $1.10 earnings per share. Total revenues also increased on the back of segmental performances.
Euronet’s top-line improvement over the past several years has remained quite impressive. This is evident from its CAGR of 12.4% during the 2013-2018 period. With more products and services as well as new and exciting geographic options, Euronet is well positioned to continue with these robust growth rates.
Notably, the company constantly put in efforts to expand its portfolio and work on capabilities. 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 2018 with 40354 ATMs, up 9% year over year. The company's Ria Money Transfer segment is well poised for growth, owing to several alliances. All these initiatives are likely to aid the company.
Euronet’s EFT Segment should continue to perform well given steady focus on deploying more devices across extended markets and its ability to develop advanced technology for new products on both ATMs and POS terminals for optimizing and enriching customer experience.
The Money Transfer segment also impresses with steady growth of physical and digital distribution channels. The acquisitions of HiFX, IME and XE should lead to long-term growth for this segment.
The company’s leverage is low compared with the industry average. Moreover, its cash and cash equivalents have been increasing from the past several years. It has been successfully lowering its indebtedness over the past couple of years. This reflects the company’s solid balance sheet position.
The Zacks Consensus Estimate for current-year earnings is pegged at $6.88, representing a year-over-year increase of 24.4% on 15.3% higher revenues of $2.93 billion. For 2020, the Zacks Consensus Estimate for earnings stands at $8.05 on $3.4 billion revenues, translating into a respective 16.9% and 14.9% year-over-year increase.
Expected long-term earnings growth rate is pegged at 13.3%, higher than the industry average of 9.3%, which is an upside for the company.
Shares of this Zacks Rank #2 (Buy) company have gained 32.8% year to date, outperforming the S&P 500’s growth of 12.2%.
Other Key Picks
Investors interested in the same space might consider a few other top-ranked stocks, including Synchrony Financial SYF, FedNat Holding Company FNHC and Virtu Financial, Inc. VIRT, each currently carrying a Zacks Rank #2.
Synchrony Financial operates as a consumer financial services company. It delivered positive results in three of the last four reported quarters, the average earnings surprise being 13.83%. The company currently flaunts a Zacks Rank of 1 (Strong Buy).You can see .
FedNat and subsidiaries engage in insurance underwriting, distribution and claim processing in the United States. The company is a Zacks #2 Ranked player and pulled off average positive surprise of 44.87% in the trailing four quarters.
Virtu Financial provides market making and liquidity services to the financial markets worldwide. The company recorded average beat of 0.63% in four quarters. It currently sports a Zacks Rank #1.
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