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Why MoneyGram International Sank by Over 9% Today

By Eric Volkman – Oct 29, 2021 at 5:55PM

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The company's Q3 results were mixed, and revenue guidance wasn't inspiring.

What happened

MoneyGram International's (MGI 0.10%) Q3 results -- announced after market close on Thursday -- weren't necessarily disastrous. Nevertheless, investors did not greet them warmly and sent the financial services company's shares down by more than 9% the following day.

So what

The quarter was a mixed one for MoneyGram. It saw the company book $319.6 million in revenue, which was down by 1% on a year-over-year basis. The decline would have been steeper had it not been for a significant (35%) rise in revenue derived from online, cross-border transactions across that stretch of time.

Coins sinking in water.

Image source: Getty Images.

Analysts were expecting better, however. Collectively, they were modeling $330.3 million for the quarter, according to data compiled by Zack's.

That wasn't so for net income. MoneyGram's non-GAAP (adjusted) net income also slid, declining 11% to $12.4 million ($0.13 per share). Yet those prognosticators tracking the stock had only an average $0.08 per share estimate for adjusted net income.

MoneyGram is rapidly going digital. It said that such transactions comprised 34% of all customer transactions through its system during the quarter, and that it will continue to widen this channel. The company's goal is to reach 50% by 2024.

Now what

For its current Q4, MoneyGram proffered selected guidance. The company believes that it will earn around $325 million in revenue which, alas, would be only marginally higher than the slightly over $323 million it posted in Q4 2020 -- possibly a major reason for the investor sell-off, given the top-line beat of the trailing quarter. 

Meanwhile, MoneyGram is forecasting roughly $60 million for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), and adjusted free cash flow of around $24 million for this Q4.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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