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Euronet (EEFT) Rises 34% in 6 Months: More Room for Upside?

Shares of Euronet Worldwide, Inc. EEFT have gained 33.7% in the past six months compared with the industry’s 20.6% growth. The Finance sector and the S&P 500 composite index rose 19.2% and 20.4%, respectively, in the same time frame. With a market capitalization of $5 billion, the average volume of shares traded in the last three months was 0.3 million.

Improved cross-border volumes, higher direct-to-consumer digital transactions, a growing ATM network, buyouts and solid cash reserves continue to drive Euronet.

The company, presently carrying a Zacks Rank #3 (Hold), boasts an impressive track record of beating estimates in each of the trailing four quarters, the average surprise being 2.88%.

Return on equity in the trailing 12 months is currently 29%, which is higher than the industry’s average of 19.8%. This substantiates the company’s efficiency in utilizing shareholders’ funds.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Can EEFT Retain the Momentum?

The Zacks Consensus Estimate for Euronet’s 2024 earnings is pegged at $8.46 per share, which hints at a 13.4% increase from the 2023 reported figure. Management expects the metric to witness 10-15% year-over-year growth in 2024. The consensus mark for revenues is $4 billion, which indicates an improvement of 7.1% from the 2023 figure.

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The Zacks Consensus Estimate for 2025 earnings is pegged at $9.57 per share, which suggests a 13.2% increase from the 2024 estimate. The consensus mark for revenues is $4.3 billion, implying 9.8% growth from the 2024 estimate.

The top line of Euronet continues to benefit on the back of strong contributions from the EFT Processing, epay and Money Transfer segments.  Revenues have witnessed consistent growth since 2010 except for the year 2020 wherein it suffered due to COVID-inflicted volatility on the EFT business. The metric improved 9.8% year over year in 2023 on the back of higher transaction volumes in all three of its units.

The EFT Processing segment is aided by an increase in average active ATMs, rebounding cross-border volumes and continued growth in new markets. Meanwhile, consistent expansion of digital media and mobile sales drives the performance of the epay segment while the Money Transfer unit benefits on the back of higher U.S.-outbound transactions, direct-to-consumer digital transactions and international-originated money transfers.

Euronet makes constant efforts to expand its independent ATM network across several countries and benefit from an opportunity to process a higher number of transactions. In February 2024, it expanded the network to Belgium and Mexico, as a result of which its global ATM footprint is spread across 38 countries in Europe, Asia Pacific, Africa and the Americas. The move in Mexico marks the company's entry into the emerging LATAM market.

EEFT relies on an inorganic growth strategy in the form of acquisitions and partnerships through which it aims to develop new products and services, boost revenues as well as solidify its geographical presence. In February 2024, EEFT purchased Infinitium to enhance its Ren payments platform. Infinitium’s products will provide additional protection from customer fraud and merchant chargebacks for online transactions, thereby offering a high degree of protection for securing payments processed through Euronet’s network.

Also, a booming digital economy spurs growth in contactless payments, which lays the perfect ground for Euronet to capitalize on as an electronic payment and transaction processing solutions provider.

To pursue such uninterrupted growth-related initiatives, a sound financial position serves as a cushion for EEFT. The financial strength is substantiated by a growing cash balance and adequate cash-generating abilities. It comprised sound cash reserves of $1.3 billion as of Dec 31, 2023, up 10.9% from the 2022-end level.  It generated operating cash flows of $643.1 million in 2023.

EEFT boasts an impressive VGM Score of A. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.

Stocks to Consider

Some better-ranked stocks in the Finance space are Artisan Partners Asset Management Inc. APAM, MFA Financial, Inc. MFA and BrightSphere Investment Group Inc. BSIG. While Artisan Partners sports a Zacks Rank #1 (Strong Buy), MFA Financial and BrightSphere Investment carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Artisan Partners’ earnings surpassed estimates in three of the trailing four quarters and matched the mark once, the average surprise being 21.11%. The Zacks Consensus Estimate for APAM’s 2024 earnings suggests an improvement of 13.2% while the consensus estimate for revenues suggests growth of 10.5% from the corresponding year-ago reported figures. The consensus mark for APAM’s 2024 earnings has moved 4.5% north in the past 30 days.

The bottom line of MFA Financial beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 9.20%. The Zacks Consensus Estimate for MFA’s 2024 earnings suggests an improvement of 2.5% while the consensus estimate for revenues suggests growth of 12.3% from the corresponding year-ago reported figures. The consensus mark for MFA’s 2024 earnings has moved 3.8% north in the past 30 days.

BrightSphere Investment’s earnings outpaced estimates in two of the last four quarters, matched the mark once and missed the same in the remaining one occasion, the average surprise being 21.12%. The Zacks Consensus Estimate for BSIG’s 2024 earnings suggests an improvement of 13.5% while the consensus estimate for revenues suggests growth of 6.2% from the corresponding year-ago reported figures. The consensus mark for BSIG’s 2024 earnings has moved 3.1% north in the past 60 days.

Shares of Artisan Partners, MFA Financial and BrightSphere Investment have gained 21.3%, 13.9% and 13.3%, respectively, in the past six months.

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MFA Financial, Inc. (MFA) : Free Stock Analysis Report

Euronet Worldwide, Inc. (EEFT) : Free Stock Analysis Report

Artisan Partners Asset Management Inc. (APAM) : Free Stock Analysis Report

BrightSphere Investment Group Inc. (BSIG) : Free Stock Analysis Report

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