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Euronet Trading at a Low P/E Multiple: Time to Buy the Stock?
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Euronet Worldwide, Inc.’s (EEFT - Free Report) current valuation suggests that the stock is available at a discounted price compared with the industry average. EEFT stock trades at a forward 12-month price-to-earnings (P/E) ratio of 10.97X, lower than its five-year median of 15.77X and the Zacks Financial - Miscellaneous Services industry average of 16.33X. Its peers in the payments space, like WEX Inc. (WEX - Free Report) and Paymentus Holdings, Inc. (PAY - Free Report) , are now trading at 10.13X and 60.09X, respectively.
Image Source: Zacks Investment Research
Shares of Euronet have seen ups and downs in 2024, with the stock rising only 4.2% year to date. This performance has lagged the industry and the S&P 500 index, raising questions about its current valuation and prospects.
EEFT YTD Price Performance
Image Source: Zacks Investment Research
What’s Driving EEFT?
Euronet is riding multiple growth drivers. The European travel recovery continues to boost the EFT Processing unit, while the merchant services business is gaining momentum and expansion into new markets further strengthens its position. Strategic initiatives, such as expanding ATM networks into regions like Mexico, increasing Money Transfer agent locations and forging strong partnerships within the epay segment, are also contributing to its growth trajectory.
Euronet's diversification strategies, including the expansion of its REN payments platform and Dandelion cross-border payments, are essential for thriving in an evolving market. Additionally, its initiatives to capitalize on global digitization trends are expected to drive long-term growth and strengthen its market position.
EEFT’s Improving Financial Health
Euronet exited the third quarter with cash and cash equivalents of $1.5 billion, which improved 21.5% from the 2023-end level. Debt obligations, net of the current portion, amounted to $1.2 billion, which dropped 30.3% from the figure as of Dec. 31, 2023.
In the trailing 12-month period, free cash flow increased nearly 24% to $680 million.
EEFT’s Earnings Estimates & Surprise History
The Zacks Consensus Estimate for Euronet’s 2024 earnings is pegged at $8.59 per share, indicating 15.2% year-over-year growth. The same for 2025 signals a further 12.4% increase. Also, the consensus mark for EEFT’s 2024 and 2025 revenues suggests 8% and 7.3% year-over-year growth, respectively.
The company beat earnings estimates in three of the past four quarters and missed once, with an average surprise of more than 8%.
Despite its strengths, Euronet faces short-term challenges that could impact its growth. The payments sector is increasingly competitive, with digital transactions surging and fintech advancements reshaping the landscape. Industry giants like PayPal, Fiserv, Visa and Mastercard dominate with extensive networks and significant transaction volumes.
Moreover, rapid digitization could reduce demand for ATM withdrawals by tourists in Euronet's key markets, potentially impacting its revenues. Additionally, rising operating expenses may exert pressure on its profit margins, posing further challenges. Total operating expenses increased 9.5% year over year in 2023 and 7% in the first nine months of 2024.
Conclusion: Hold EEFT Stock for Now
Given Euronet’s cheap valuation, improving financials and bright earnings outlook, current investors should stay put and benefit from its strategic moves. However, new investors should wait on the sidelines and keep an eye on its rising expenses and the growing competition in the payments space.
Image: Bigstock
Euronet Trading at a Low P/E Multiple: Time to Buy the Stock?
Euronet Worldwide, Inc.’s (EEFT - Free Report) current valuation suggests that the stock is available at a discounted price compared with the industry average. EEFT stock trades at a forward 12-month price-to-earnings (P/E) ratio of 10.97X, lower than its five-year median of 15.77X and the Zacks Financial - Miscellaneous Services industry average of 16.33X. Its peers in the payments space, like WEX Inc. (WEX - Free Report) and Paymentus Holdings, Inc. (PAY - Free Report) , are now trading at 10.13X and 60.09X, respectively.
Shares of Euronet have seen ups and downs in 2024, with the stock rising only 4.2% year to date. This performance has lagged the industry and the S&P 500 index, raising questions about its current valuation and prospects.
EEFT YTD Price Performance
What’s Driving EEFT?
Euronet is riding multiple growth drivers. The European travel recovery continues to boost the EFT Processing unit, while the merchant services business is gaining momentum and expansion into new markets further strengthens its position. Strategic initiatives, such as expanding ATM networks into regions like Mexico, increasing Money Transfer agent locations and forging strong partnerships within the epay segment, are also contributing to its growth trajectory.
Euronet's diversification strategies, including the expansion of its REN payments platform and Dandelion cross-border payments, are essential for thriving in an evolving market. Additionally, its initiatives to capitalize on global digitization trends are expected to drive long-term growth and strengthen its market position.
EEFT’s Improving Financial Health
Euronet exited the third quarter with cash and cash equivalents of $1.5 billion, which improved 21.5% from the 2023-end level. Debt obligations, net of the current portion, amounted to $1.2 billion, which dropped 30.3% from the figure as of Dec. 31, 2023.
In the trailing 12-month period, free cash flow increased nearly 24% to $680 million.
EEFT’s Earnings Estimates & Surprise History
The Zacks Consensus Estimate for Euronet’s 2024 earnings is pegged at $8.59 per share, indicating 15.2% year-over-year growth. The same for 2025 signals a further 12.4% increase. Also, the consensus mark for EEFT’s 2024 and 2025 revenues suggests 8% and 7.3% year-over-year growth, respectively.
The company beat earnings estimates in three of the past four quarters and missed once, with an average surprise of more than 8%.
Euronet Worldwide, Inc. Price and EPS Surprise
Euronet Worldwide, Inc. price-eps-surprise | Euronet Worldwide, Inc. Quote
EEFT: Risks to Watch
Despite its strengths, Euronet faces short-term challenges that could impact its growth. The payments sector is increasingly competitive, with digital transactions surging and fintech advancements reshaping the landscape. Industry giants like PayPal, Fiserv, Visa and Mastercard dominate with extensive networks and significant transaction volumes.
Moreover, rapid digitization could reduce demand for ATM withdrawals by tourists in Euronet's key markets, potentially impacting its revenues. Additionally, rising operating expenses may exert pressure on its profit margins, posing further challenges. Total operating expenses increased 9.5% year over year in 2023 and 7% in the first nine months of 2024.
Conclusion: Hold EEFT Stock for Now
Given Euronet’s cheap valuation, improving financials and bright earnings outlook, current investors should stay put and benefit from its strategic moves. However, new investors should wait on the sidelines and keep an eye on its rising expenses and the growing competition in the payments space.
Overall, the outlook is largely neutral for EEFT shares. It currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.