MoneyGram Rides On Transaction Growth In Its Digital Business

MoneyGram International, Inc. (NASDAQ:MGI) is well-positioned to benefit from its Direct-to-Consumer digital business, evident from improved transaction growth of the business.

On a year-to-date basis, the company’s digital platform — MoneyGram Online — registered a year-over-year surge of around 60% in its transaction growth. The huge uptick compares favorably with a 39% rise in transaction growth reported in fourth-quarter 2019.

Improved overall transaction growth can be attributed to strength in the company’s U.S- outbound and international transactions. While revenues improved 70% year over year for international transactions on a year-to-date basis, transactions soared 116% year over year. Similarly, U.S.-outbound recorded transaction growth of 101% year over year and revenue growth of 37% year over year on a year-to-date basis.

Such strength in digital transactions comes as a relief in the dismal period of the coronavirus pandemic as people around the globe will have easier access to the company’s digital services in a situation when they have been temporarily restricted to their houses.

Initiatives for Boosting Digital Business

The company seems to be in a bid to expand its digital business on partnerships. For expanding its global network and getting access to the leading consumer-centric capabilities, MoneyGram partnered with LuLu Money in January 2020. In the same month, it tied up with EbixCash as part of its constant investments to boost its digital business.

MoneyGram has also been making consistent efforts to enhance its digital services suite, backed by constant technological upgradations. Such initiatives enabled customers to engage in digital transactions in over 67 countries. As a result, digital transactions now account for 23% of the total money transfer transactions.

We believe that such a strong digital business is likely to benefit the company’s Global Funds Transfer segment, which offers money transfer services through digital networks. The segment accounted for 92.1% of MoneyGram’s total revenues in 2019.

Shares of the Zacks Rank #2 (Buy) company have lost 37.2% on a year-to-date basis, underperforming the industry’s decline of 33.6%. Nevertheless, we believe that the company’s strong digital business, attributable to its strategic initiatives, is likely to drive shares going forward.

Other Stocks to Consider

Some other top-ranked stocks in the same space are PRA Group, Inc. (NASDAQ:PRAA) , Houlihan Lokey, Inc. (NYSE:HLI) and Moody's Corporation (NYSE:MCO) . While PRA Group and Houlihan Lokey currently sport a Zacks Rank #1 (Strong Buy), Moody’s carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

All three companies surpassed estimates in the last reported quarters by 20%, 18.92% and 4.17%, respectively.

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