Should You Buy, Sell or Hold Euronet Stock Before Q3 Earnings?

Core Viewpoint - Euronet Worldwide, Inc. is set to release its third-quarter 2024 results on October 24, 2024, with earnings per share estimated at $3.12, reflecting a 14.7% increase from the previous year [1] - The revenue consensus estimate stands at $1.1 billion, indicating a 5.7% growth year-over-year [1] Earnings Estimates - The Earnings ESP for Euronet is +0.96%, but the company currently holds a Zacks Rank of 4 (Sell), suggesting a lack of confidence in an earnings beat this quarter [2] Revenue Drivers - Revenue growth is expected from the EFT Processing, epay, and Money Transfer segments, with EFT Processing revenues estimated at $373.9 million, an 8.1% increase from the prior year [3] - The epay segment is projected to generate $266 million in revenues, a 0.4% improvement year-over-year, driven by growth in digital media content and prepaid mobile markets [3] - The Money Transfer segment is anticipated to reach $423.4 million in revenues, reflecting a 6.9% growth, supported by an increase in U.S.-outbound transactions and digital transactions [4] Margin Pressures - Euronet's margins may be negatively impacted by rising operating expenses due to inflation, increased competition, and higher marketing costs in the Money Transfer segment [4] Stock Performance & Valuation - Euronet's stock has increased by 19.2% over the past year, underperforming the industry average growth of 40% and the S&P 500's 37.1% increase [5] - The company's current valuation is at 10.25X forward 12-month earnings, below its five-year median of 16.18X and the industry's average of 15.16X, indicating a lack of investor confidence [5] Growth Prospects - Euronet shows potential for growth through diversified product offerings, geographic expansion, and strategic partnerships, particularly in EFT Processing and Money Transfer [7] - However, challenges such as increasing operating expenses, debt burden, and competition in the Money Transfer segment may pressure margins [7] Investment Considerations - The reliance on marketing expenses and a competitive money transfer market raises concerns about the timing for investment in Euronet's stock [8] - Current shareholders may consider locking in profits due to the company's operating margin profile and limited short-term growth potential [8]