Buy: Euronet Worldwide (EEFT)
A leading provider of electronic payment solutions, Euronet Worldwide (EEFT) processed roughly 2.3 billion transactions in 2013. The company serves financial institutions, retailers, and telecom companies in more than 150 countries, processing $62 billion in ATM transactions and money transfers last year. A leading distributor and processor of wireless telecom minutes, Euronet operates about 665,000 airtime terminals around the globe.
Euronet posted strong September quarter results, with per-share earnings up 43% to $0.80, beating the consensus of $0.73. Revenue rose 26% to $453 million, also outstripping expectations.
The company, which operated 19,808 ATMs on September 30, processed 655 million total transactions during the quarter, an increase of 13%.
Euronet is vulnerable to the vagaries of consumer spending, particularly in foreign markets. Moreover, ATM and product expansion could stall if the company fails to gain traction in new markets. Still, Wall Street expects per share profits to surge 26% to $2.57 in 2014, with sales up 17%. Euronet has a history of beating the consensus, and the shares seem reasonably valued considering the growth outlook and contributions from acquisitions. Euronet is being initiated as a Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, November 3 2014