Euronet Worldwide Shares Popped: What You Need to Know (EEFT)

Euronet Worldwide Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of electronic payment specialist Euronet Worldwide (Nasdaq: EEFT ) popped 10% higher on Friday ... despite there being no particular news of note behind the move.

So what: No particular news today, that is to say. My best guess as to the origins of this move is that investors are having a delayed reaction of elation over an announcement Euronet actually released two days ago. To wit, its e-pay subsidiary has inked an agreement to distribute "Zynga Game Cards" for Facebook-friend Zynga in 18 European jurisdictions.

Now what: You don't even have to know what a Zynga Game Card is to guess how this news would affect Euronet's stock price. Just using the word "Zynga" in a sentence is enough to drive a stock price totally batty these days. But there's actually nothing crazy about investors' enthusiasm for Euronet.

Consider: While GAAP accounting standards paint Euronet as "unprofitable" today, the company generated $42.5 million in free cash flow over the last year. This values Euronet at about 19 times FCF -- a bit pricey for a 14.5% grower. But if the Zynga tie-up boosts Euronet's growth rate even a little bit, it could justify that valuation pretty easily. If you ask me, investors are being perfectly reasonable in buying Euronet today -- they're just a little slow out of the gate.

Want to know more about Euronet? Add the stock to your Watchlist.

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Fool contributor Rich Smith does not own (or short) any company named above. The Motley Fool has a disclosure policy. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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