EEFT - Embedded Expectations Analysis - 2020 07 17
Euronet Worldwide, Inc. (EEFT:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 31.0x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, and management may be concerned about coronavirus headwinds, their REV technology, and their Money Transfer segmentSpecifically, management may be concerned about their ability to use their REV technology to close the gap between physical and digital banking. They may also be exaggerating the impact their technology has had on pressuring governments and regulators to introduce new payments infrastructures. Management may also be concerned about continued headwinds to cross-border transactions and weakness in brick-and-mortar channels related to coronavirus. Finally, they may be concerned about continued weakness in the Money Transfer segment as well as the sustainability of increased India-based transactions
Euronet Worldwide is an electronic payments provider. The company provides payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. The company operates three segments: Electronic Financial Transaction Processing, which processes transactions for a network of automated teller machines and point-of-sale terminals; epay, which provides distribution and processing of prepaid mobile airtime and other electronic content and payment processing services for various prepaid products, cards and services; and Money Transfer, which provides consumer-to-consumer and global account-to-account money transfer services.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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