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Is MoneyGram Poised to Ride on Online Transaction Growth?

Sapna Bagaria

MoneyGram International Inc. MGI announced that its online platforms have witnessed record-breaking transaction growth during the holiday shopping season.

To put this in perspective, between Dec 1 and Dec 25, MoneyGram-branded online platforms reported a yearly transaction growth of more than 70%. Moreover, 80% of online transactions were made via mobile, reflecting the popularity of handheld devices to make money transfer.

Outside of the United States, online transactions during the holiday period increased nearly 120% on a year-over-year basis. Globally, all of MoneyGram’s major online markets achieved double-digit transaction growth during the holiday period.

This data set bodes well for MoneyGram given the fact that it has vociferously made investments to develop its digital money transfer platform. It seems that the company’s investments are paying off well. It is well poised to see revenue gains from digital platform as consumers’ preference for fast and safe money transfer via mobile phone is increasing.

An estimated 3.2 billion smartphone users along with changing global migration flows create huge business growth opportunity for MoneyGram.

MoneyGram has been facing stiff competition in recent years from new fintech players in the industry, reflecting decline in revenues since 2017 through the first nine months of 2019. It has been trying to keep itself grounded by focusing on product and channel diversification, and investing in digital business and key international markets.

MoneyGram realizes the need to stay technologically updated in this evolving technological period and to this end, it launched its re-designed app in late 2018. Its app has received a good response and has since then been downloaded more than 1.6 million times.

MoneyGram has made additional digital enhancements over the past year such as expanding the loyalty program internationally, launching Visa Direct, redesigning its website, and bringing digital capabilities to new countries so that consumers can remit money in over 60 markets.
The company’s growing digital wing will provide it with a new identity.

Notably, it  has been facing increased compliance issues over the years. The company views its digital money remittance business as a startup backed by an old name.

In 2020, MoneyGram will further expand its digital business by investing in digital marketing and rolling out additional products to provide customer satisfaction.

We believe its digital growth will aid the company, which missed estimates in three of the four reported quarters. The stock has lost 3.9% in the past year against its industry’s growth of 16.5%.

 

Other companies in the same space such as Western Union Co. WU and PayPal Holdings, Inc. PYPL have gained 51.7% and 26.7%, respectively, over the same time frame.

MoneyGram carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is AXA Equitable Holdings, Inc. EQH, with a Zacks Rank #2 (Buy). The company surpassed earnings estimates in each of the trailing four quarters, the surprise being 12.4%, on average.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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