Yahoo Finance Why Is MoneyGram (MGI) Up 3.9% Since Last Earnings Report?
It has been about a month since the last earnings report for MoneyGram (MGI). Shares have added about 3.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MoneyGram due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
MoneyGram Misses Q3 Earnings, Revenues Up Y/Y
MoneyGram reported third-quarter 2022 adjusted earnings per share (EPS) of 11 cents, which lagged the Zacks Consensus Estimate by 15.4%. The bottom line also fell 15.4% year over year.
Revenues improved 3.5% year over year to $330.8 million and beat the consensus mark by 1.5%.
Despite an elevated expense level, investors might have been impressed by a gradual recovery of its money transfer revenues, and improved fees and other revenues. Strong contributions from the Global Funds Transfer and Financial Paper Products segments also contributed to the quarterly results.
Quarterly Operational Update
Fee and other revenues of $319.1 million inched up 0.4% year over year in the third quarter but missed the consensus mark of $320 million. Investment revenues increased more than six-fold to $11.7 million year over year, higher than the Zacks Consensus Estimate of $5.5 million.
Total operating expenses escalated 8.8% year over year to $133.1 million, mainly due to higher transaction and operations support, and compensation and benefits expenses. Interest expense of $12.2 million fell 6.2% year over year in the quarter under review.
Adjusted EBITDA declined 3% year over year to $54.8 million due to strengthening dollar value against major currencies. Adjusted EBITDA margin of 16.6% deteriorated 110 basis points (bps) year over year.
Segments in Detail
Global Funds Transfer
The segment reported revenues of $308 million, which inched up 0.7% year over year on the back of growing money transfer revenues. Segmental gross profit grew 3.5% year over year to $140.5 million.
Money transfer transactions improved 6% year over year in the third quarter. Cross-border online revenues of MoneyGram Online climbed 17% year over year, while transactions climbed 15% year over year. Active cross-border customer growth rose 11% year over year in the quarter under review.
Digital transactions surged 39% year over year, accounting for 45% of MoneyGram’s money transfer operations at the third-quarter end. Digital revenues attained a record figure of $95 million, climbing 36% year over year.
Financial Paper Products
Total revenues of $22.8 million soared 67.6% year over year. While money order revenues of $11.1 million improved 11% year over year, official check revenues increased more than three-fold to $11.7 million year over year. The segment reported a gross profit of $15.7 million for the third quarter, which grew 18% year over year.
Financial Position (as of Sep 30, 2022)
MoneyGram exited the third quarter with cash and cash equivalents of $126.7 million, which plunged 18.4% from the 2021-end level. MGI’s payment service obligations of $3,543.5 million slid 1.3% from the figure at 2021 end. Net debt dipped 0.1% from the figure as of Dec 31, 2021, to $785.7 million.
Adjusted free cash flow of $16 million plunged 52.2% year over year in the third quarter.
Capital expenditures came in at $17.8 million, up 74.5% year over year.
Outlook
MoneyGram is expected to be acquired by Chicago-based private equity firm Madison Dearborn Partners, LLC, for $1.8 billion. The deal is likely to close in the December quarter of 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted 11.11% due to these changes.
VGM Scores
At this time, MoneyGram has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, MoneyGram has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
MoneyGram belongs to the Zacks Financial - Miscellaneous Services industry. Another stock from the same industry, Globe Life (GL), has gained 5.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Globe Life reported revenues of $1.32 billion in the last reported quarter, representing a year-over-year change of +4.2%. EPS of $2.15 for the same period compares with $1.78 a year ago.
Globe Life is expected to post earnings of $2.18 per share for the current quarter, representing a year-over-year change of +28.2%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Globe Life. Also, the stock has a VGM Score of C.
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MoneyGram International Inc. (MGI) : Free Stock Analysis Report
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