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MoneyGram (MGI) Q3 Earnings Beat, Revenues Miss Estimates


MoneyGram International Inc. MGI reported earnings of 24 cents per share, which surpassed the Zacks Consensus Estimate by 4.4% but decreased 4% year over year.

Total revenues of $397.8 million declined 4% on a reported and 5% on a constant currency basis year over year as well as lagged the Zacks Consensus Estimate of $415 million.

Top-line growth was impacted by a changing macroeconomic environment, including softness in previously strong markets and corridors, central bank intervention of capital flows, and a volatile immigration environment, which adversely impacted the money transfer business.

Among the revenue components, fee and other revenues declined 4.4% year over year to $390.1 million, while investment revenues increased 67% year over year to $7.7 million.

Moneygram International, Inc. Price, Consensus and EPS Surprise

Total operating expense of $374.5 million declined 3.2% year over year, led by lower commission expense, compensation and benefits.

The company is progressing well on its digital initiatives, evident by 6% growth in digital money transfer revenues. These represented 15% of total money transfer revenues.

Segment Update

The company’s Global Funds Transfer segment reported revenues of $377.1 million, down 4% year over year. Operating income of $29.6 million was up 3% year over year. Operating margin of 7.8% increased 100 basis points year over year.

In the Financial Paper Products segment, the company reported revenues of $20.7 million, down 9.5% year over year. Operating income nudged up 2.2% year over year to $4.6 million. Operating margin decreased 160 basis points year over year to 22.2%.

Financial Update

Adjusted free cash flow was $25.2 million, down 5.5% year over year.
Cash and cash equivalent balance was $170.4 million at Sep 30, 2017 compared with $157.2 million at the end of 2016.

Merger With Ant Financial

The merger agreement with Ant Financial Services Group is on track. Both companies continue to work with the Committee on Foreign Investment in the United States and various other regulatory agencies, and remain focused on closing the transaction as per schedule.

Zacks Rank and Other Releases

MoneyGram carries a Zacks Rank #3 (Hold). Some of the better-ranked stocks in the same space are Houlihan Lokey, Inc. HLI, Moody's Corporation MCO and Western Union Co. WU. Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Houlihan Lokey surpassed earnings estimates in each of the trailing four quarters, resulting in an average positive surprise of 23.3%.

Moody's beat earnings estimates in each of the trailing four quarters, delivering an average positive surprise of 12.9%.

Western Union beat earnings estimates in three of the trailing four quarters, delivering an average positive surprise of 9.1%.

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