Euronet Worldwide (EEFT) Down 33.6% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Euronet Worldwide (EEFT). Shares have lost about 33.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Euronet Worldwide due for a breakout? 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 catalysts.

Euronet's Q4 Earnings Beat Estimates, Improve Y/Y

Euronet Worldwide delivered fourth-quarter 2019 earnings of $1.63 per share, beating the Zacks Consensus Estimate by 1.2%. Also, the bottom line improved 19% year over year on higher revenues and a greater number of transactions.

The company’s net income soared 73.6% to $1.91 earnings per share in the quarter under review.

Total revenues were $694 million, up 6.9% from the year-ago quarter.

However, the top line missed the Zacks Consensus Estimate by 2.5%.

Euronet’s total transactions were 1.28 billion, having increased 19% year over year.

Adjusted operating income rose nearly 26% to $107.2 million.

Segmental Results

EFT Processing Segment’s total revenues grew 21% (23% in constant currency) year over year on the back of higher transactions and a rise in operated ATMs. Adjusted EBITDA of $71.9 million soared 55% (58% at cc) from the year-ago period. Operating income was $52.5 million, up 134% year over year (up 139% on constant currency basis).

The epay Segment’s total revenues inched up 1% year over year to $218 million (4% up on constant currency basis). Adjusted EBITDA amounted to $35.3 million, improving 15% from the year-earlier figure (18% up on constant currency basis). Operating income stands at $33.6 million, up 15% year over year (17% on constant currency basis). Reported transactions were 437 million, up 27% year over year. This segmental growth was driven by consistent digital media.

The Money Transfer Segment’s total revenues climbed 3% (4% at cc) year over year to $281.9 million, backed by 4% higher transactions. Adjusted EBITDA amounted to $41.3 million, reflecting a 7% decline (5% decrease at cc) from the prior-year quarter. Operating income totaled $33 million, up 15% in constant currency. This segment reported total transactions of 29.7 million, up 4% year over year.

Corporate and Other Segment reported an expense of $11.9 million for the reported quarter, up 21.4% year over year.

1Q20 Guidance

Euronet expects adjusted earnings per share for the first quarter of 2020 to be nearly 95 cents (assuming forex and share price to be stable), worse than the Zacks Consensus Estimate of $1.04.

Financial Update

Total assets at fourth-quarter end were $4.6 billion, up 40.2% from the level at 2018 end.

Cash and cash equivalents skyrocketed nearly 104.2% to $786.1 million from the figure at 2018 end.

Debt obligations, net of current portion surged 85% year over year to $1.09 billion.

Full-Year Results

For 2019, the company’s revenues came in at $2.7 billion, up 8% year over year.

How Have Estimates Been Moving Since Then?

Estimates review followed a downward path over the past two months. The consensus estimate has shifted -9.86% due to these changes.

VGM Scores

At this time, Euronet Worldwide has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

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