On Monday, MoneyGram International Inc. (MGI) announced its expansion in North Cyprus, by adding 10 locations of the Near East Bank to the company’s money transfer network.
Near East Bank is a respectable financial organization in North Cyprus and has a strong affiliation with the region’s largest university – Near East University. As a result, the costumers of the Near East Bank can send and receive money from 32 convenient locations of MoneyGram, which are established in North Cyprus.
The expansion is also an attempt to tap the rapidly developing $400 billion global money transfer industry, which continues to grow year over year. According to the World Bank, Cyprus is well placed in the list of top 25 send countries and sent about $2 billion in remittances annually, primarily to Pakistan and Bulgaria. Hence, MoneyGram intends to explore ample avenues in Cyprus for network expansion and transaction growth.
Money transfer business remains the driving force for MoneyGram. The company has been spreading its money transfer business across the globe through various recognized financial institutions. Besides, MoneyGram is also enhancing its brand awareness by developing user-friendly payment solutions that suit the new market trends. With regard to this growth strategy, the company also plans to expand its cash-to-account service to additional banks as well as add new online services.
Furthermore, MoneyGram continues to explore new growth avenues in untested locations by incorporating latest and flexible technology that facilitates transfers through mobile phones, prepaid cards or ATMs, in order to speed up its money transfer services and enhance the remittance volumes. These efforts also help to retain the company’s competitive vigour, particularly against the steady global growth of its arch-rival Western Union Co. (WU).
Earnings Review
MoneyGram reported fourth-quarter 2011 earnings per share of 4 cents, significantly lower than the Zacks Consensus Estimate of 17 cents but notably higher than the loss of $1.86 in the year-ago quarter. However, operating income plunged 24.6% year over year to $36.2 million.
Higher money transfer transaction volumes and higher fee and other revenue drove the top line, while absence of preferred dividend payouts, tax benefit and lower interest expenses helped the bottom line. However, these were mostly offset by lower investment income along with higher operating and other expenses.
Going ahead, the Zacks Consensus Estimate for the first quarter is pegged at 21 cents per share, up about 112% from the year-ago loss of $1.68 per share. While a couple of downward revisions were witnessed in the stock, over the last 30 days, one firm revised its first quarter estimate upward.
Currently, MoneyGram carries a Zacks Rank #3, which translates into a short-term Hold rating and a long-term Neutral recommendation on the shares.
To read this article on Zacks.com click here.
Zacks Investment Research
