Is Euronet Worldwide (EEFT) Now Attractive After A 25.9% One‑Year Share Price Slide?

• If you are wondering whether Euronet Worldwide's share price around US$74 is a bargain or a value trap, this article will walk through what the numbers actually say about the stock.
• The share price has seen a 1.0% gain over the last 30 days, but that sits against a 25.9% decline over the past year and a 49.0% decline over five years. This can change how investors think about both risk and potential upside.
• Recent news coverage has focused on Euronet Worldwide's position in electronic payments and money transfer services, including how it is adapting its business mix as the industry evolves. These updates provide context for why the share price has moved the way it has, even without fresh earnings headlines in the spotlight.
• On our valuation framework, Euronet Worldwide scores 5 out of 6 for being undervalued. You can see that full breakdown in our valuation score of 5/6. Next we will walk through the main valuation approaches we use and then finish with a broader way to think about what this score really means for long term investors.

Find out why Euronet Worldwide's -25.9% return over the last year is lagging behind its peers.

Approach 1: Euronet Worldwide Excess Returns Analysis

The Excess Returns model looks at how much profit a company generates above the return that equity investors typically require, and then capitalizes those “excess” profits into a per share value.

For Euronet Worldwide, the model starts with a Book Value of $31.83 per share and a Stable Book Value of $27.30 per share, based on the median book value over the past 5 years. Using an Average Return on Equity of 22.65%, this framework arrives at a Stable EPS of $6.19 per share, sourced from that historical median return on equity.

The required return for shareholders is captured by a Cost of Equity of $2.43 per share. After covering that, the company is modeled to generate an Excess Return of $3.76 per share. Aggregating these excess returns, the Excess Returns valuation estimates an intrinsic value of about $94.06 per share.

Against the current share price of roughly $74, this points to the stock trading at about a 21.2% discount, which indicates it appears undervalued according to this model.

Result: UNDERVALUED

Our Excess Returns analysis suggests Euronet Worldwide is undervalued by 21.2%. Track this in your watchlist or portfolio, or discover 884 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Euronet Worldwide.

Approach 2: Euronet Worldwide Price vs Earnings

For a profitable company like Euronet Worldwide, the P/E ratio is a practical way to think about value because it links what you pay per share to the earnings the business is already generating. Investors usually accept a higher or lower P/E based on what they expect for future growth and how much risk they see, so a “normal” P/E should reflect both earnings prospects and the stability of those earnings.

Euronet Worldwide currently trades on a P/E of 10.27x. That sits below the Diversified Financial industry average P/E of 14.20x and also below the peer group average of 12.75x. Simply Wall St’s Fair Ratio for the stock is 14.97x, which is a proprietary estimate of what the P/E could be given Euronet Worldwide’s earnings profile, industry, profit margins, market value and risk characteristics.

The Fair Ratio aims to be more tailored than a simple industry or peer comparison because it incorporates company specific factors rather than assuming all businesses in the group deserve similar multiples. Comparing the current P/E of 10.27x to the Fair Ratio of 14.97x suggests the shares look undervalued on this metric.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Euronet Worldwide Narrative

Earlier we mentioned that there is an even better way to understand valuation. Narratives let you set your own story for Euronet Worldwide by linking your assumptions about future revenue, earnings, margins and fair value to a simple forecast that you can track on Simply Wall St’s Community page. You can compare that fair value to the current share price to frame your buy or sell decisions, and see it update automatically as fresh news or earnings arrive. This is why one investor might build a Narrative around a fair value close to US$145 if they focus on digital payments expansion and buybacks, while another might anchor closer to US$110 if they are more cautious about competition, regulation and the company’s mix of older and newer businesses.

Do you think there's more to the story for Euronet Worldwide? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com