Euronet Worldwide, Inc. (NASDAQ:EEFT) just released its latest third-quarter results and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of US$664m, some 7.2% above estimates, and statutory earnings per share (EPS) coming in at US$0.76, 160% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Euronet Worldwide's ten analysts is for revenues of US$2.81b in 2021, which would reflect a notable 14% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 655% to US$4.64. In the lead-up to this report, the analysts had been modelling revenues of US$2.78b and earnings per share (EPS) of US$4.88 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$122, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Euronet Worldwide analyst has a price target of US$145 per share, while the most pessimistic values it at US$107. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Euronet Worldwide shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Euronet Worldwide's past performance and to peers in the same industry. It's clear from the latest estimates that Euronet Worldwide's rate of growth is expected to accelerate meaningfully, with the forecast 14% revenue growth noticeably faster than its historical growth of 9.3%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 14% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Euronet Worldwide is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Euronet Worldwide. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$122, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Euronet Worldwide going out to 2022, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Euronet Worldwide , and understanding these should be part of your investment process.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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