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Here's Why You Should Stay Away From Euronet (EEFT) Now

Euronet Worldwide, Inc. EEFT has been witnessing downward earnings estimate revisions, of late. The Zacks Consensus Estimate for the bottom line of $1.22 has moved 75% south over the past 30 days, indicative of analysts’ bearish sentiment on the stock.

So, what could be the reason for this pessimistic stance? The company recently reported first-quarter 2020 earnings of 55 cents per share, missing the Zacks Consensus Estimate by 26.7%. Also, the bottom line fell 35.3% year over year due to the coronavirus outbreak affecting its business.

Euronet witnessed transaction declines in the first quarter due to the COVID-19 pandemic along with lower operating income. Its revenues also missed the consensus mark by 1.7%. Operating income plunged nearly 44% to $31.6 million in the period.

The company is likely to continue facing declines in money transfer due to the current market volatility. The World Bank predicts money remittance to drop 20% in 2020, which will adversely impact the company directly.

In March, the company withdrew its initial guidance for the first quarter due to the coronavirus effect on global economy. Its EFT segment has been witnessing a downtrend in international transactions due to travel restrictions imposed by respective national governments. World and domestic transactions see a massive reduction as authorities are strictly regulating people’s movements within a country or state.

Moreover, the company has been witnessing rising operating expenses over the years inducing margin contraction, which in turn, caused earnings erosion. Its expenses should remain elevated going ahead as the company constantly invests in technology and other expansion initiatives.

The company's 2020 earnings estimate stands at $1.22 while the same for current-year revenues is pegged at $2.2 billion, both implying a respective downside of 82.6% and 20.2% from the year-ago reported figures.

Shares of this Zacks Rank #5 (Strong Sell) company have lost 40.3% in a year's time, wider than its industry's decline of 25%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Some better-ranked stocks like Square, Inc. SQ, PRA Group, Inc. PRAA and Global Payments Inc. GPN have rallied 19%, 16% and 21.3% each in the same time frame. While Square holds a Zacks Rank #4 (Sell), PRA Group and Global Payments hold Zacks Rank #3 (Hold).

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PRA Group, Inc. (PRAA): Free Stock Analysis Report
Euronet Worldwide, Inc. (EEFT): Free Stock Analysis Report
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Square, Inc. (SQ): Free Stock Analysis Report
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