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Strong Digital Platform, International Business Aid MoneyGram

MoneyGram International, Inc. MGI is well-poised for growth, benefitting from strength in its international business and digital platform along with efforts to streamline its capital structure.

On a year-to-date basis, shares of the company have gained 1% against the industry’s decline of 8.8%. The stock has seen the Zacks Consensus Estimate for current-quarter earnings being revised 25% upward over the past 30 days.

 

 

What’s Driving MoneyGram?

The company continues to perform well on robust growth in its digital payment platform. Revenues from the platform have been increasing consistently in the past several quarters. MoneyGram has digital partnerships with leading companies around the world, allowing customers to send or receive money in over 65 countries. Digital transactions now account for 22% of total money transfer transactions.

MoneyGram also seems to bank on revenues stemming from its international markets. It is in a bid to diversify its revenue mix geographically to match the growth rate of the global remittance market. The business contributed around 62% of total money transfer revenues. It has also registered year-over-year growth rate of 3% in fourth-quarter 2019.

Moreover, the company attempts to streamline its capital structure by reducing debt levels. Although its net debt-to-capital ratio is 89%, which compares unfavorably with the industry’s average of 64.8%, its debt levels have reduced to some extent. For 2019, net debts totaled $850.3 million, down 5.6% from the 2018-end level.

MoneyGram also seems to benefit from efficiency in operations, primarily attributable to reduced operating expenses. In 2019, total operating expenses were $1.2 billion, down 13.7% year over year. However, high compliance costs due to the company’s stringent business regulations are headwinds for the company.

Zacks Rank & Other Stocks to Consider

MoneyGram currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the same space are PRA Group, Inc. PRAA, Houlihan Lokey, Inc. HLI and Moody's Corporation MCO. While PRA Group currently sports a Zacks Rank #1 (Strong Buy), Houlihan and Moody’s carry 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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Moody's Corporation (MCO): Free Stock Analysis Report
 
PRA Group, Inc. (PRAA): Free Stock Analysis Report
 
MoneyGram International Inc. (MGI): Free Stock Analysis Report
 
Houlihan Lokey, Inc. (HLI): Free Stock Analysis Report
 
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