Fortifying its money transfer network in Mexico, MoneyGram International Inc. (MGI) inked a strategic alliance with the renowned drugstore chain −Farmacias Guadalajara. The association will add 1,000 Mexican locations to the company’s over 327,000 global agent network across 200 countries.
Per the agreement, MoneyGram will be offering its basic money transfer services to the customers of Farmacias Guadalajara. This will enable MoneyGram to transfer money easily from Mexico to countries across the globe, and thus progressively cover more of the market share. The idea is to add value to the business by giving MoneyGram customers access to convenient and varied money transfer options.
Growth prospects for MoneyGram are also validated by the World Bank, who estimated Mexico’s remittance market to be worth $22.5 billion annually from the US alone. This makes Mexico the third largest nation in the list of worldwide countries that receive the largest amount of inbound transfers.Hence, we believe that the rising number of immigrants in the country amplify money remittance provisions, thereby opening up ample avenues of growth for MoneyGram in future as well.
We expect such alliances to boost MoneyGram’s leading global market position, and also accelerate the company’s organic growth by boosting its money transfer business. Simultaneously, these efforts will also enhance demand for global remittances and boost its brand value.
Meanwhile, MoneyGram is scheduled to release its third-quarter 2013 results before the closing bell on Oct 24. The Zacks Consensus Estimate for the third quarter is pegged at 31 cents per share, up 21.2% from the prior-year quarter.
MoneyGram currently carries a Zacks Rank #3 (Hold), indicating no clear directional pressure on the stock in the near term. Other outperformers in the financial sector include Fleetcor Tech Inc. (FLT), American Express Co. (AXP) and Portfolio Recovery Associates Inc. (PRAA). All these stocks carry a Zacks Rank #2 (Buy).
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