Cash Could Still Be King For This Cheap Stock
Cash is still king in many countries, and, in developing nations, many people do not have bank accounts, which is why money-sending services like MoneyGram International, Inc. (Nasdaq: MGI) can be a lifesaver. MoneyGram is a global provider of innovative money transfer and payment services.
PR Newswire recently reported, “In the first quarter of 2018, the company initiated a restructuring and reorganization program as part of its Digital Transformation initiative.
The company incurred $6.4 million of expenses in the fourth quarter and $20.4 million for the full year. This program reflects the alignment of the organization with the delivery of new digital touch-points for customers and agents and the optimization of the company’s global network.
This program, which is substantially complete, realized efficiencies that resulted in $30.5 million of expense reductions in 2018 and, upon completion, the company expects to realize $55 million of efficiencies on an annualized basis.”
Alex Holmes, MoneyGram’s chairman and CEO, said: “2018 was a pivotal year of building, modernizing, and de-risking as we accelerated our Digital Transformation efforts and re-baselined the business to lead in protecting consumers against fraud.”
Holmes added: “We started the year with a limited online presence and ended the year with world-class capabilities in 24 countries. Our newly-updated app rivals that of any other fintech company, and we integrated with leading mobile wallet providers around the world.
While revenue declined as a result of our planned actions to de-risk the business, thanks to the successful execution of cost-saving initiatives, we positioned the company to maintain Adjusted EBITDA margin and Adjusted Free Cash Flow.”
For the full year 2019, the company is projecting revenue to decline approximately 2 to 4 percent on a constant currency basis and Adjusted EBITDA is expected to decline approximately 8 to 12 percent on a constant currency basis. As a result of the company’s compliance changes implemented in 2018, the company anticipates the bulk of the revenue and Adjusted EBITDA decline to occur in the first half of the year.
MGI anticipates returning to full year growth for both revenue and Adjusted EBITDA, on a constant currency basis, in 2020.
Holmes commented on the 2019 outlook: “Looking forward, 2019 will be the Year of the Customer – the year to acquire, learn, and retain.
The results of the customer experience initiatives launched last year will enable us to recapture growth, deliver on our vision to offer an exceptional experience with each transaction and continue to lead in compliance.
As we capitalize on the strength of our digital & physical network, we will provide consumers with the protection, choice and convenience they demand in this omnichannel environment.”
Analysts expect the stock to gain as the company’s growth initiatives start to yield results and investors gain more insight about the company’s developmental prospects.
MGI should be considered a buy if momentum increases.
Look for an entry at $2.37 with a price target of at least $3.23 based on the pattern in the chart.