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Why Is MoneyGram International (MGI) Down 16.8% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for MoneyGram International Inc. (MGI). Shares have lost about 16.8% in that time frame.

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

MoneyGram International Beats Q4 Earnings Estimates

MoneyGram International reported earnings of 26 cents per share, beating the Zacks Consensus Estimate by 36.8%. Earnings grew 30% year over year.

Total revenues of $408.2 million declined 2% on a reported basis and 4% on constant currency basis but surpassed the Zacks Consensus Estimate of $403 million.

Top-line growth was impacted by a changing macroeconomic environment, including softness in previously strong markets and corridors, central bank intervention of capital flows and a volatile immigration environment, which adversely affected the money transfer business.

Among the revenue components, fees and other revenues declined 2.8% year over year to $399.4 million, while investment revenues increased 66% from the prior-year quarter to $8.8 million.

Total operating expenses of $464.7 million increased 18% year over year, due to higher transaction and operations support.

Adjusted EBITDA was $71.3 million, up 10% on a reported basis and 8% on constant currency basis, year over year. Adjusted EBITDA margin was 17.5%, up 200 basis points from the year-ago quarter.

Segment Update

The company’s Global Funds Transfer segment reported revenues of $386.6 million, down 2.3% year over year due to a decline in money transfer and bill payment revenues.  Money transfer revenues results were primarily impacted by the weak U.S. to U.S. business and slower growth in Africa, partially offset by favorable currency movement. The segment reported an operating loss of $56.1 million against operating earnings of $25.8 million in the year-ago quarter.

In the Financial Paper Products segment, the company reported revenues of $21.6 million, up 10.2% year over year. Operating income nudged up 2% from the prior-year quarter to $5 million. Operating margin decreased 190 basis points year over year to 23.1%.

Financial Update

Adjusted free cash flow was $105.1 million, up 8.6% from the prior-year quarter.

Total assets of $4.77 billion as of Dec 31, 2017, increased 3.8% year over year.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months.

MoneyGram International Inc. Price and Consensus

 

MoneyGram International Inc. Price and Consensus | MoneyGram International Inc. Quote

VGM Scores

Currently, MGI has a great Growth Score of A and a grade with the same score on the momentum front. The stock was also allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is equally suitable for value, growth, and momentum investors.

Outlook

MGI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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