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MoneyGram (MGI) Down 2.1% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for MoneyGram (MGI). Shares have lost about 2.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is MoneyGram due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

MoneyGram Q4 Loss, Wider Than Expected

MoneyGram International reported fourth-quarter loss of 2 cents per share, wider than the Zacks Consensus Estimate of a loss of 1 cent. In the year-ago quarter, the company had reported earnings of 20 cents per share.

MoneyGram’s total revenues of $345.8 million were down 15% on a reported basis and 14% on constant currency, year over year. Revenues missed the Zacks Consensus Estimate by 0.14%.

Fees and other revenues decreased 17% to $332 million, while investment revenues increased 60% to $14 million.

Adjusted EBITDA was $60.0 million, down 15.8% year over year, adjusted EBITDA margin was 17.4% and remained relatively flat year over year.
Total operating expenses declined by 28% year over year to $332.1 million.

Segment Details

In the Global Funds Transfer segment, money transfer revenues decreased 17.3% year over year to $319.7 million. Bill payment revenues also decreased 16.8% year over year to $16.8 million.

The Financial Paper Products segment reported total revenues of $26.1 million, up 21% year over year due to a 5.4% uptick in money order revenues and a 44% increase in official check revenues. Adjusted operating margin improved 870 basis points from the year-ago quarter to 31.8%.

Liquidity

As of Dec 31, 2018, MoneyGram had cash and cash equivalents of $145.5 million, down 23.5% year over year. The company’s total assets were $4.3 billion, down 10% from year-end 2017 levels. The company exited the second quarter with $902 million of outstanding debt, down 0.7% from year-end 2017 levels.

Adjusted free cash flow for 2018 was $21.1 million, down 18% year over year.

2019 Guidance

For full-year 2019, the company is projecting revenues to decline approximately 2% to 4% and adjusted EBITDA is expected to decline approximately 8% to 12%, both on a constant currency basis.
 

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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