It has been about a month since the last earnings report for Euronet Worldwide (EEFT). Shares have added about 2.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Euronet Worldwide due for a pullback? 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.
Euronet Worldwide Q3 Earnings Miss on High Costs
Euronet Worldwide’s adjusted earnings of $3.03 per share fell short of the Zacks Consensus Estimate by 2.9%. Yet, the bottom line improved 11% year over year.
Total revenues amounted to $1.1 billion, which advanced 9% year over year and on a constant-currency basis. The top line beat the consensus mark by 3.6%.
The quarterly earnings was affected by inflationary pressures, rising operating expenses and adversities on the epay segment from limited promotional campaigns. The negatives were partly offset by robust growth in high-volume low-value transactions in India, strong cross-border and direct-to-consumer digital transaction growth in the Money Transfer segment and expanding merchant services business.
EEFT’s Q3 Update
EEFT’s net income of $151.6 million climbed 45.5% year over year. Operating income grew 9% year over year and on a constant-currency basis to $182.2 million.
Total operating expenses were $917.1 million, which escalated 9.6% year over year due to higher direct operating costs, salaries and benefits and selling, general and administrative expenses.
Adjusted EBITDA of $225.7 million rose 6% year over year and on a constant-currency basis.
EEFT’s Segmental Performances
The EFT Processing segment recorded revenues of $373 million in the third quarter, which advanced 8% year over year and 7% on a constant-currency basis. However, the metric missed the Zacks Consensus Estimate of $373.9 million.
Adjusted EBITDA rose 10% year over year and on a constant-currency basis to $142.1 million.
Operating income of $117.3 million improved 12% year over year and on a constant-currency basis. Total transactions climbed 34% year over year to 2,982 million on the back of improved high-volume low-value transactions across India.
Continued growth in travel, an improved merchant services business and expansion into new markets benefited the unit’s performance.
The epay segment’s revenues rose 10% year over year and on a constant-currency basis to $290.3 million. The reported figure surpassed the consensus mark of $265.5 million.
Adjusted EBITDA of $31 million increased 3% year over year and on a constant-currency basis .
Operating income grew 3% year over year and 2% on a constant-currency basis to $29.1 million. Transactions in the unit totaled 1,126 million, which climbed 22% year over year.
The segment’s quarterly results were aided by continued digital media and mobile growth, partly offset by inflationary headwinds and costs associated with launching new proprietary products.
The Money Transfer segment reported revenues of $438.2 million in the third quarter, which advanced 11% year over year and 10% on a constant-currency basis. The metric surpassed the Zacks Consensus Estimate of $423.4 million.
Adjusted EBITDA grew 6% year over year and 4% on a constant-currency basis to $64.1 million.
Operating income was $58.1 million, which improved 8% year over year and 7% on a constant-currency basis. Total transactions increased 11% year over year to 45.1 million as a result of higher cross-border transactions and direct-to-consumer digital transactions. However, the upside was partly offset by a decline in intra-U.S. transactions.
Corporate and Other expenses escalated 12.6% year over year to $22.3 million.
EEFT’s Financial Update (as of Sept. 30, 2024)
Euronet exited the third quarter with cash and cash equivalents of $1.5 billion, which improved 21.5% from the 2023-end level.
Total assets of $6.3 billion increased 6.7% from the figure at 2023-end.
Debt obligations, net of the current portion, amounted to $1.2 billion, which dropped 30.3% from the figure as of Dec. 31, 2023. Short-term debt was $1.1 billion.
Equity improved 9% from the 2023-end figure to $1.4 billion.
There was roughly $669.8 million left under EEFT’s revolving credit facilities at the third-quarter end.
EEFT’s 2024 Bottom-Line View Reaffirmed
Management continues to expect adjusted earnings per share (EPS) to record 10-15% year-over-year growth in 2024. Additionally, it anticipates achieving adjusted EPS growth in the 10-15% range in 2025.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 5.05% due to these changes.
VGM Scores
Currently, Euronet Worldwide has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Euronet Worldwide has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Euronet Worldwide belongs to the Zacks Financial - Miscellaneous Services industry. Another stock from the same industry, Synchrony (SYF), has gained 17.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.
Synchrony reported revenues of $4.61 billion in the last reported quarter, representing a year-over-year change of +5.7%. EPS of $1.94 for the same period compares with $1.48 a year ago.
For the current quarter, Synchrony is expected to post earnings of $1.88 per share, indicating a change of +82.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +3% over the last 30 days.
Synchrony has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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