MoneyGram Earnings Fall In Line in Q3, 2015 Guidance Intact

MoneyGram International Inc. MGI third-quarter earnings of 17 cents per share came in line with the Zacks Consensus Estimate.

MoneyGram’s total revenue for the quarter was $368.6 million, up 8% on a constant currency basis and 3% on a reported basis. While fee and other revenues decreased 3% to $366 million, investment revenues remained unchanged at $2.8 million.

Total operating expenses increased 3% year over year to $352.0 million.

Quarterly Segment Results

In the Global Funds Transfer segment, revenues grew 3.4% year over year to $351.0 million. Money transfer revenues from U.S. Outbound and Non-U.S. sends grew 15% on a constant currency basis and accounted for 87% of total money transfer revenues.

Self-service money transfer revenues surged 71% from the prior-year quarter, representing 15% of money transfer revenues.

As a result of higher expenses, adjusted operating margin deteriorated to 9.8% from 11.6% in the prior-year quarter.

In the Financial Paper Products segment, MoneyGram’s total revenue fell 4.9% year over year to $17.6 million, reflecting a decline in fee and other revenues from both money order and official check sub-segments. Adjusted operating margin deteriorated to 19.3% from 31.4% in the year-ago quarter.

Liquidity

As of Sep 30, 2015, MoneyGram had cash and cash equivalents of $151.6 million (down from $250.6 million at year-end 2014) and total assets of $4.51 billion (down from $4.64 billion at year-end 2014). The company exited the third quarter with $956.1 million of outstanding debt (down from $963.5 million at the end of 2014).

Outlook

MoneyGram’s kept its 2015 guidance intact. It expects full-year revenues to be flat year over year on a constant currency basis, while adjusted EBITDA is anticipated to fall 8–12%.

For the fourth quarter, the company expects revenues and adjusted EBITDA to witness double-digit constant currency growth year over year.

Zacks Rank

Currently, MoneyGram carries a Zacks Rank #2 (Hold).

Stocks to Consider

The bottom line at the company’s peers Western Union Co. WU and Euronet Worldwide, Inc. EEFT ) beat their respective Zacks Consensus Estimate by 2.3% and 14.8%, but Xoom Corp. XOOM incurred a loss of 2 cents per share, missing our expectation.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.