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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Euronet Worldwide, Inc.    EEFT

EURONET WORLDWIDE, INC.

(EEFT)
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Wal-Mart takes on money transfer companies with new service

04/17/2014 | 01:44pm EST
The Walmart logo is pictured in Los Angeles

(Reuters) - Wal-Mart Stores Inc (>> Wal-Mart Stores, Inc.) is launching a money transfer service in a direct challenge to the dominance of Western Union Co. and MoneyGram, aiming to broaden the financial services it offers to low-income customers and increase store traffic.

(Reuters) - Wal-Mart Stores Inc (>> Wal-Mart Stores, Inc.) is launching a money transfer service in a direct challenge to the dominance of Western Union Co. and MoneyGram, aiming to broaden the financial services it offers to low-income customers and increase store traffic.

Wal-Mart said on Thursday that Euronet Worldwide Inc's (>> Euronet Worldwide, Inc.) Ria Money Transfer subsidiary would begin running the service, called "Walmart-2-Walmart," next week.

The new service, which Wal-Mart says will charge lower fees than those currently offered by competitors, will enable shoppers to send and receive cash from family members and friends at more than 4,000 U.S. discount stores.

Wal-Mart, which will not offer the service online or in its international stores, hopes consumers will turn around and spend at least some of that money at the stores.

Daniel Eckert, senior vice president of services for Walmart U.S., said Walmart-2-Walmart "challenges the status quo and drives down prices."

After the news, Western Union (>> The Western Union Company) shares were down 4 percent, while those of MoneyGram International Inc (>> Moneygram International Inc), which currently provides such services for Wal-Mart shoppers, plummeted 15.6 percent. Euronet was up 4.4 percent.

"This significant foray casts a pall over Western Union's pricing model and long-term organic revenue growth outlook," Andrew Jeffrey, an analyst at SunTrust Robinson, said in a research note.

For Western Union, U.S. domestic money transfer represents about 8 percent of its total 2013 revenue.

When asked about the new Walmart service, Western Union said it was well-positioned in the business, saying it offered services through a network of about 46,000 agents in the United States alone.

Sterne Agee analyst Jennifer Dugan said she thought the new Walmart service would not have a significant impact on Western Union's market share and average pricing.

"We believe Western Union's agent locations in the U.S. are ... more convenient to the majority of those sending and receiving money transfers," she wrote in a research note.

LITTLE ACCESS TO BANKING SERVICES

The new service is another effort to boost finance revenues from Wal-Mart customers, many of whom have little access to banking services, into stores that are experiencing declining traffic.

According to a 2011 survey by the Federal Deposit Insurance Corp, 8.2 percent of U.S. households are "unbanked" and another 20.1 percent are "underbanked," making money transfers an important personal finance tool for them.

Walmart-2-Walmart customers can transfer up to $50 (29.76 pounds) for a fee of $4.50, compared with between $4.75 and $5 at rival services, Wal-Mart said. Transferring $900 will cost $$9.50, compared with $73 via MoneyGram.

"The bigger loser is MoneyGram as they have a bigger threat as they have 27 percent revenue that came from Walmart in 2013," said Rahul Agarwal at Guggenheim Partners. "MoneyGram gets a quarter of their revenue through that agreement."

The Walmart service will limit customers to $900 in transfers a day; higher amounts would require the sender to provide much more information, adding a level of complexity that would compound costs, Eckert told Reuters, noting there will little demand anyway for transfers above $1,000.

Consumers can still transfer money through MoneyGram. MoneyGram also facilitates online money transfers, while WalMart-2-Mart will strictly transfer cash from store to store.

Western Union said its online domestic money transfer service was growing fast.

Wal-Mart has long been interested in taking a bigger piece of the financial services market. It had applied for a bank charter but withdrew it in 2007 after opposition from banks and labour unions.

Wal-Mart U.S. last year generated about 1 percent of annual sales from financial services such as money orders, prepaid cards, wire transfers, check cashing and bill payments, according to its latest annual report. The company offers those services at its Walmart MoneyCenter locations and customer service desks.

Wal-Mart shares were up 0.6 percent to $77.70 in afternoon trading.

(Reporting by Phil Wahba in New York. Additional reporting by Avik Das; Editing by Paul Simao, Jilian Mincer and Bernadette Baum)

By Phil Wahba


© Reuters 2014
Stocks mentioned in the article
ChangeLast1st jan.
ACCESS CO., LTD. -0.26% 755 End-of-day quote.2.72%
AIMING INC. 0.48% 415 End-of-day quote.-0.72%
EURONET WORLDWIDE, INC. -3.87% 138.61 Delayed Quote.-4.35%
MONEYGRAM INTERNATIONAL, INC. 3.41% 7.27 Delayed Quote.33.03%
WALMART INC. -1.59% 144.64 Delayed Quote.0.34%
WESTERN UNION COMPANY 1.25% 21.93 Delayed Quote.-0.05%
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Financials (USD)
Sales 2020 2 432 M - -
Net income 2020 -48,3 M - -
Net Debt 2020 178 M - -
P/E ratio 2020 -154x
Yield 2020 -
Capitalization 7 251 M 7 251 M -
EV / Sales 2020 3,06x
EV / Sales 2021 2,65x
Nbr of Employees 7 700
Free-Float 79,6%
Chart EURONET WORLDWIDE, INC.
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Euronet Worldwide, Inc. Technical Analysis Chart | EEFT | US2987361092 | MarketScreener
Technical analysis trends EURONET WORLDWIDE, INC.
Short TermMid-TermLong Term
TrendsNeutralBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 10
Average target price 145,56 $
Last Close Price 138,61 $
Spread / Highest target 40,7%
Spread / Average Target 5,01%
Spread / Lowest Target -20,6%
EPS Revisions
Managers and Directors
NameTitle
Michael J. Brown Chairman, President & Chief Executive Officer
Rick L. Weller Chief Financial & Accounting Officer
Martin L. Brückner Chief Technology Officer & Senior Vice President
Thomas A. McDonnell Lead Independent Director
M. Jeannine Strandjord Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
EURONET WORLDWIDE, INC.-4.35%7 251
SQUARE, INC.4.65%102 701
FISERV, INC.-4.97%72 541
GLOBAL PAYMENTS INC.-11.16%57 287
AFTERPAY LIMITED12.84%29 306
FLEETCOR TECHNOLOGIES, INC.-2.79%22 121