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
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.
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