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MoneyGram (MGI) Shares Jump 4.5% on Japanese Smiles Deal

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MoneyGram International, Inc.’s MGI shares jumped 4.5% yesterday after it announced a partnership with global fintech company Digital Wallet Corporation of Japan, the owner of Smiles Mobile Remittance. The deal has expanded MoneyGram’s cross-border money transfer business.

The move enables clients in Japan to use the Smiles mobile app to send money to more than 200 countries. The mobile money transfer platform and digital wallet will enhance MoneyGram’s capabilities, thus boosting its international exposure. The deal will enable Smiles wallet users to leverage MoneyGram’s extensive network globally.

MoneyGram, a leader in digital peer-to-peer payment evolution, expects to generate significant revenues from processing large payment volumes in the coming days via partnerships with fintech companies. The company made multiple deals with such fintech companies in recent times. It expanded the mobile wallet network in Asia by joining forces with Bangladesh's mobile financial service provider, bKash. MoneyGram joined forces with Saudi Arabia's urpay to boost its presence in the Middle East region.

Through the partnership with Digital Wallet Corporation, MGI is expected to capitalize on the growing cross-border money transfer services market in the Asia-Pacific. More new deals in neighboring countries can be expected from the company in the near future, further boosting its footprint in the region. This positions the company for long-term growth.

MoneyGram’s total digital transactions through the MoneyGram platform hit an all-time high in third-quarter 2021, reflecting growth of 63% from the prior-year period. The latest deal with Digital Wallet is likely to stimulate the growth momentum. Given the stiff competition prevalent in the U.S market, the company’s focus on diversifying its revenue mix geographically to align with the global remittance market growth rate bodes well.

Competition

MoneyGram is facing steep competition from peers like The Western Union Company WU, which joined forces with Cebuana Lhuillier in a bid to expand digital money transfer services across the Philippines in early September. Western Union is rapidly investing in the digital platform to stay ahead in the fast-changing remittance market. The company anticipates constant-currency revenue growth of 3-4% for 2021. The metric marked a 3% decline in 2020. WU expects operating margin to remain at 21.5% for 2021, indicating an increase from 20.8% in 2020.

The remittance space is also witnessing movements from fintech players like PayPal Holdings, Inc. PYPL. PayPal offers domestic and international person-to-person payment facilities with the help of PayPal and Xoom products. The company continues to gain solid traction in the global online payment market. In the Asia-Pacific region, PYPL is expanding its presence via growing operations in Australia, Philippines and other countries. It enables customers to send payments in more than 200 markets globally. For 2021, PayPal anticipates revenues between $25.3 billion and $25.4 billion, indicating growth of 18% at current spot rates and 17% on a currency-neutral basis.

Price Performance

MoneyGram’s shares have risen 21.8% in the past year compared with a 14.5% increase of the industry.

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Zacks Rank & Key Pick

MoneyGram currently has a Zacks Rank #3 (Hold). A better-ranked player in the Finance space is Alerus Financial Corporation ALRS, which presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Based in Grand Forks, ND, Alerus Financial provides numerous financial services to clients. Its financial strength is reflected by massive total assets of $3.2 billion at third quarter-end, which increased 5.4% for the first nine months of 2021. Rising investment securities are likely to keep boosting the company’s asset position in the coming quarters. Alerus Financial’s bottom line for 2021 is expected to jump 11.1% year over year to $2.80 per share. ALRS beat earnings estimates thrice in the last four quarters and missed once, with the average surprise being 23.6%.


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MoneyGram International Inc. (MGI) : Free Stock Analysis Report

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