Moneygram International Inc. (MGI) stock is currently trading at $17.37 per share (+0.93%). The stock has a market capitalization of $938.765 million with an inflated price/earnings ratio of 39.48. The stock’s earnings per share is $0.44. Unfortunately, projections for MGI are bearish with a 1-year target estimate price of $11.89. The stock has traded in a wide range over the past 52 weeks, reaching as high as $17.92, and as low as $5.83.

From an investment perspective, it’s important to note that there have been some remarkable fluctuations in the performance of Moneygram stock. In Q2 2016, the stock missed on earnings projections with estimates of $0.21 and actual earnings of $0.15. Fast-forward to Q3 2016, and things were different. The actual earnings amounted to $0.25 per share with estimates at $0.22. By the end of 2016, the Q4 readings were another disappointment. Actual earnings of $0.20 were reported, with estimates at $0.24. For the latest quarter, Q1 2017, actual earnings bested forecasts by $0.05 per share, with earnings of $0.26.


Financials and analyst expectations

If we turn our attention to the financials and recommendation trends, some interesting data is available. Between 2014 and 2015, revenue plunged from $1.55 billion to $1.54 billion, but more importantly earnings declined from $72.1 million to $-76.9 million. By 2016, revenues increased again to $1.63 billion, while earnings edged higher at $16.3 million. As far as recommendation trends go, there has been somewhat of an improvement in the outlook that Thomson Reuters analysts have for MGI stock. Between February and May 2017, the number of analysts recommending a hold position dropped from 11 to 9, and the stock is rated at 2.8.  On the scale, 1.0 represents a strong buy and 5.0 represents a sell.

This is clearly a hold stock for now, subject to geopolitical volatility and other concerns. Unfortunately, Moneygram has had a torrid time in terms of upgrades and downgrades. On 26 January 2017, MGI was downgraded by First Analysis from an overweight rating to an equal rate rating. On 30 January 2017, another downgrade was made, this time by Feltl & Company, from a buy to a hold. Based on the glut of data in the market, it is somewhat surprising that MGI is trading near its 52-week high.


Recently, Chinese juggernaut, Ant Financial Services Groups signaled that it may be interested in acquiring Moneygram. Lawmakers and individuals who are concerned about a foreign government having access to sensitive personal information with a Moneygram money transfer stock deal will do well to give the stock a wide berth. In January, a figure of $880 million was proposed for a buyout, but the counterproposal came in at $1 billion. Traders will do well to follow-up on the current status of these buyout negotiations since it may set a precedent for similar takeovers.


Technical performance of MGI

As a stock trader, it is risky to invest too heavily in any individual stock. Financial planners and stockbrokers typically advise clients to spread their risk across multiple assets, with things like exchange traded funds, mutual funds, and the like. That way at least, investors are not at the mercy of any individual stock – it’s the aggregate performance of the market or the industry that matters. When it comes to Moneygram International Inc., it should be pointed out that the ROI was at least 0.70 over the past 1 year. This is better than the industry average. The price-to-book ratio of the stock is zero, while the industry average runs at 2.97. This could indicate that MGI is significantly undervalued. If the market is about to turn the corner and go bearish, it is best to avoid the stock given that it is trading near its 1-year high. The missed earnings forecasts are another source of concern, and will certainly play into the decision-making processes of traders and investors with MGI.

Leave a Reply

You must be logged in to post a comment.