Description

Long Euronet (EEFT) 

Base Case PT: $160 (+60% as of 3/15/23)

Timeframe 12-18 months

Intro

We believe Euronet is an underappreciated collection of good FinTech businesses growing revenue at a mid-teens rate trading at only ~7x 2024 EBITDA (versus historical average of 10-11x) and 11x FCF (vs historical average of 17x) that can fully revert to historical valuation levels as international travel rebounds to 2019 levels and their ambitious technology initiatives gain traction among large bank customers.  There is upside optionality if either of their two technology-based growth initiatives (REN and Dandelion) take off. The company has been hit with a monsoon of headwinds the last three years: COVID providing the ultimate stress test to their ATM business, a Fintech collapse, inflation, Euro implosion, and higher rates. We believe the superb management team has navigated this as well as can be reasonably expected and now likely has all three of their core business growing in double digits, with very strong incremental margins.  With balance sheet flexibility and what seems to us to be prudently conservative guidance, we believe they can meet/exceed consensus in 2023, driving additional reasons for EEFT to re-rate more in line with its historical absolute and relative multiples. 

Additionally, we believe the market is missing the following key thesis points for EEFT, which will become more evident over the next 2-3 years (starting in back half of 2023) as their technological initiatives scale:

1. Business Synergies: While the company reports in three seemingly siloed segments, it’s our belief that the three businesses in aggregate offer significant synergies in effectively building out a global financial network, with multiple touchpoints at the bank, merchant, and consumer level.

2. Tech Initiatives:  Because of these underappreciated synergies, we believe there is higher likelihood of success of their ambitious technology growth initiatives (REN and Dandelion), whereby CEO Michael Brown has targeted $100M in incremental pre-tax profit (>$4.00 EPS) from REN, Dandelion, and their POS market expansion.

3. Improved Disclosures: As REN scales this year and Dandelion does next year, we believe their savvy management team will continue giving more financial disclosures that will help investors appreciate the opportunity and timeline to material earnings contributions from both.

Taken together, we believe the false narrative that EEFT is a collection of “secularly challenged” businesses (as believed by some on the sell side) should begin to dissipate, and with the ongoing recovery in travel and the company blowing by its 2019 EPS/EBITDA highwater marks, it should trade closer to its average EV/EBITDA multiple in the 11x range.

With that in mind, we target $160 (60% upside within the next 12 months) or 11x our 2024 EBITDA and 17x our 204 FCF estimates. 

Euronet’s Businesses

Part of the reason the stock trades at a cheap multiple is the perceived complexities of the business.  We don’t think they are all that complicated and so below attempt to demystify them, as well as show how they tie together.  

The company reports in three segments, with revenue and EBITDA contributions (LTM) shown below:

EFT Processing

Electronic Funds Transfer (EFT) processing refers primarily to their global network of ATM machines.  They have ~45,000 installed and active ATMs around the globe (primarily in Europe and Asia) and have targeted adding another 15,000 over the next couple of years.  For most of these ATMs, the company owns and operates them independently, and once gaining license to deploy them in countries, strategically places the ATMs where there is likely to be high traffic, specifically foot traffic from tourists who need to find cash quickly.

EEFT makes a small amount of money on each transaction, however a large chunk of the revenue generated is from "dynamic currency conversion" (DCC), which is essentially currency arbitrage as they can purchase currency at wholesale rates and then add significant fees when they are selling the currency.  Although objectively not a great deal for consumers, the value add here is the consumer sees all the transactions in their own currency, so they have a better mental idea of how much they are taking out or transacting.  

To illustrate the power of DCC, consider Euro to Euro vs Pound to Euro.  If you take €100 out of an ATM and are transacting in Euros ("Euro to Euro"), EEFT might only get €1 in fees.  If it's a Londoner, however, who is transacting in Pounds in a European country (Pounds to Euros), it might be €10 vs. €1.  So an ATM transaction using DCC is potentially 10x more profitable to EEFT than a typical ATM transaction.

We believe the ROIC here is excellent.  Here is how management laid out the unit economics of a “typical” ATM:

Useful Life:  10+ Years

Initial Investment: $10-$11k

Revenue/Month (blended with high seasonality):  $1,800

Operating Cost/Month:  $1,200

This results in $7,200 pretax profit per year/per ATM off the initial $10-$11k investment (~70% ROIC). 

We will note that this business gets less good under the following scenarios:

1. Higher inflation (generally cannot pass through inflation to raise pricing, but costs rise)

2. Higher interest rates (higher opportunity cost for the cash just sitting in the machines, plus they fund some of the ATM cash with rising interest debt)

3. Decline in cross-border travel (because of focus on Dynamic Currency Conversion)

This business has been hit with all three of these things in the last few years, starting with the ultimate Black Swan for the business, the COVID pandemic and ensuing government mandated lockdowns.  During COVID we saw just how much operating leverage this business has.  Essentially, when travel comes to a screeching halt (specifically tourism), revenues dry up and the fixed cost the business requires aggressively drags down margins.  More recently, inflation and interest rates have also been headwinds to the business.

Nevertheless, as travel has returned the company has been running at ~55% incremental operating margins, and segment EBITDA is moving back towards peak 2019 levels, although is still ~25% below peak EBITDA.   

We believe there should be continued optimism for 20%+ growth in this segment.  If you follow Eurocontrol, which tracks the flights of all European aviation, you can see for most of Q1 there has been a reacceleration of growth from Q4:

        Source: Eurocontrol.int

Constant currency growth for EFT in Q4 was over 40%, although a chunk of it was from the Piraeaus Bank Merchant Acquiring (PBMA) business, which we discuss later.  Nevertheless, we believe the underlying constant currency organic growth for EEFT has been above travel growth.  Management has noted that forecasts are for travel to return to 93% of 2019 levels:

“The passenger traffic in 2023 is expected to reach 92% or 93% of 2019 levels. While we’d like to see this data at least in line with that 100% of 2019, this would still be roughly a 25% improvement from 2022.  We are also seeing positive signs from travel booking sites, which indicate a very strong demand for travel this coming summer and year.”

- CFO on Q4 Earnings Call

We would also note that a major source of profits for this division, England to Europe, should also see a significant boost as Heathrow Airport had only been running at around 50% capacity until October, 2022, when the capacity restrictions were lifted.

ePay

This business is a mix of buying prepaid telephone minutes (30% of revenue) and buying gift cards (digital or physical) that typically represent digital media or prepaid credit cards (70% of revenue).  In the US, the most recognizable example of this is probably the gift card racks you see at Walgreens, Walmart, and bodegas (e.g. Apple, Google Play, Best Buy).  Companies like Blackhawk and Incomm are leaders in the US market, and they have developed relationships with both the retail merchant (e.g. Walgreens) and then the gift card company (e.g. Starbucks or Google Play).  Blackhawk was acquired by Silver Lake for 20x EBITDA in 2018.

As an example, imagine a shopper walks into Walgreens and buys a $100 Starbucks gift card.   Walgreens has a relationship with Incomm, whereby Incomm provides all of the plastic cards, the rack, and has gone through a process with Walgreens on which types of gift cards they want in the store.   Upon purchase, Walgreens pays Incomm, and then Incomm pays Starbucks in this case. 

In terms of unit economics, both Walgreens and Starbucks have a negotiation process.  With Starbucks, Incomm (or ePay) is negotiating the margin they get.  So for instance, maybe Starbucks gets $95 and Incomm keeps $5.  Depending on leverage and the type of card, this will be higher or lower.  For instance, Starbucks probably has great leverage because of their size and desirability, as well as having likely less "leakage" of the cards.  A company like Nordstrom, say, probably has higher leakage because a consumer might often spend $80-$90 of a gift card and then not really have anything to spend the last $10-$20 on.

The other negotiation is with Walgreens.  Assuming Incomm has negotiated a 5% margin with Starbucks, they then have to negotiate how much goes to Walgreens.  This will typically be well over 50%, sometimes as much as 85%. So, if Incomm, Blackhawk, or ePay is generating $5 in revenue on a $100 transaction, they are likely recognizing $5 in revenue, but gross profit will be in the $.75 to $2.50 range.  One can expect mom and pop stores to give much better unit economics, and this is primarily what EEFT goes after, whereas larger players like Blackhawk an Incomm go after the huge chains.

To this end, this business is now associated with over 800,000 POS terminals and over 350,000 retailer locations. We believe the vast majority of these locations are lower volume mom and pop stores, similar to their agents for Ria (described in Money Transfer below).

We view this as a lower quality but much more consistent business than EFT.  Margins are probably capped and the industry as a whole is likely in (slow) secular decline.  However, because of the massive network Euronet has built out while still only penetrating a small fraction of SMB merchants, with competition being fragmented, and with the synergies this business brings to other businesses, we believe it’s a solid franchise that has done quite well despite predictions of slower growth.  They have been growing total POS terminals at a 4% CAGR the last few years, but have been successful in building same store sales and getting leverage from that, with the revenue CAGR closer to 10% and trend constant currency EBITDA growth in the 13-15% range:

Money Transfer

For anyone who follows Western Union, Moneygram, or Intermex, Euronet’s Money Transfer business will be quite familiar.  Although EEFT has a few products in this segment, Ria is the driving force that represents the majority of Money Transfer international money remittance.  Ria was acquired in 2006 by Euronet when it had about 42,000 total locations around the world.  

They now have over 500,000, so management has done a good job building out a strong network for “Agents” (basically a merchant who offers the service). These agents are the same agents who would potentially offer ePay services.

To take a common example in the United States:

An undocumented immigrant in Florida wants to remit part of his paycheck back home in Mexico, so he stops into the local bodega that has a couple of different services to remit the money (in this case, say Ria and Intermex).  The consumer chooses Ria because it’s a little cheaper than Intermex and Ria will generate a fixed transaction fee as well as a currency conversion fee if applicable.  Each “corridor” (one country to another, so US to Mexico is one corridor) has different pricing dynamics and characteristics, but taken as a whole they generate about $10 in revenue for every transaction, although this has trended slightly down to about $9.50 per transaction recently. 

The currency arbitrage is kept entirely by Euronet, but the fixed fee will be split between Euronet, the Sending Agent (bodega or larger retailer like Walmart, ~50%) and Receiving Agent (retail outlet or bank, ~25%).  This applies to any remittance being sent out of a brick and mortar retail store.  Digital remittances, which are certainly growing in popularity and which Western Union and Moneygram have put the bulk of their resources into growing to compete with pure plays like Wise and Remitly, have different unit economics.  On the plus side, there are no sending and receiving agents to split commissions with in a pure digital transaction, so in theory margins should be much higher.  On the negative side, competition is often cutthroat given all the VC money pouring into the space, so customer acquisition cost is quite expensive.  As we understand it, a digital remittance also requires new and expensive regulatory requirements.  

Money Transfer is similar to ePay in that it’s been a steady double digit revenue  grower (~10% CAGR since 2019), although EBITDA growth has actually lagged (closer to 8%), we believe partly because of new markets they are entering but also with increased spending in transitioning more and more remittances to digital.  Management has stated they are confident they can get this business back to 15% EBITDA margins.

However, if you were to compare Money Transfer’s numbers to Western Union or Moneygram’s performance, you would correctly conclude that Euronet is running circles around them as Western Union and Moneygram hemorrhage market share.  We have studied Intermex’s strategy of going after Mom and Pop bodegas that are close to the residential areas, while not putting all their eggs in the digital basket, and believe Euronet has executed on a similar strategy but on a broader scale.  We think it’s the right strategy, as customers will move to digital at their own pace (in some cases, particularly the underbanked, they will not move to digital for many years).

Additionally, they have some built in advantages from their vast ePay and ATM network that allow them to do well with the types of populations (underbanked) that will continue to remit via brick and mortar for a long time.

We should also note that they have an emerging B2B platform called Xe which is like Ria except for businesses. This will ride on the Dandelion rails described below and has significant potential given the size of the international B2B remittance market, but is not a large revenue generator currently.

Business Synergies and Growth Initiatives

 Here we spell out segments synergies and then illustrate how management is attempting to capitalize on them with their three large growth initiatives--Dandelion, REN, and merchant acquiring in Greece.

Our underlying thesis on why EEFT deserves to re-rate closer to a market level multiple is that over the years Euronet has truly built out an irreplaceable, vast financial network with all the needed touch points (consumer, banks, merchants, many countries) that positions them extremely well for the ongoing Real Time Payments revolution as well as for ongoing growth in their core businesses.

Since being founded in 1994, they have built and acquired their way to operating in 200 countries with 13 transaction processing centers (six in Europe, five in Asia-Pac, and two in North America).  As mentioned above, they operate nearly 50,000 ATMs and 600,000 POS terminals across Europe, Africa, Asia Pacific, and the United States just in their EFT segment.  

They have 816,000 POS terminals for processing ePay prepaid minutes and gift cards.  And within Money Transfer, they are in over 500,000 locations worldwide.  There is some overlap across segments here, of course, but these are truly numbers at scale.

To this end, they have developed a fully functioning financial ecosystem that very few other companies can claim, with clear touch points to consumers, merchants, and banks.  

Management has stated they believe they have three distinct growth opportunities that can each add an incremental $100M in pre-tax profit over the next 5 years:  REN, Dandelion, and Piraeus Bank expansion.  We believe each of these are logical strategic initiatives attempting to lever the network described above. If they were to succeed on these initiatives, it would add an incremental $4.00/share in earnings.

Piraeus Bank Merchant Acquiring (PBMA) Acquisition- An Illustration of Business Synergies

Euronet acquired the merchant acquiring business of Piraeus Bank (PBMA) in March of 2021, although the deal did not close until Q1 2022.  In Greece, this represents 20% of “card present” transactions and 40% of total ecommerce transactions, so they have significant market share.

At the time, the deal profile looked a little pricey to us ($360M for $85-$100M in revenue and $18M in EBITDA), although management has indicated they are now running closer to $30M in EBITDA.  Ostensibly, the pitch on the deal is that Greece’s government is forcing merchants to have non-cash options (to improve tax collections) so credit/debit growth should be strong the next few years, as they lay out in the slide below:

 So despite the fairly high multiple, there is a real organic growth opportunity for Euronet. 

The real value of the deal, though, was three-fold:

1. Foray into one of the last areas of FinTech where Euronet had no direct exposure:  merchant acquiring

2. Taking the POS base of Piraeus bank, which covers 170,000 mom and pop merchants, and begin deploying their other SMB merchant solutions (ePay and Ria in particular)

3. Get a toe hold in online payment processing while simultaneously hedging exposure to cash economies

This deal, along with REN and Dandelion, are clever ways to take the company’s robust financial infrastructure that is cash and retail focused and hedge against that (move away from cash, strong eCommerce presence) while *simultaneously* stimulating their legacy businesses through cross-sell.

Michael Brown summarizes the opportunity here:

“Aside from the acquiring opportunity, we believe there are significant growth opportunities relating to our REN and REV payments technology and the capabilities of our ePay, money transfer, and EFT business segment products.  Our ability to process alternative payments such as QR codes and the other digital payments instruments included in digital wallet can immediately expand the offerings that PBMA has for its customers.  Beyond that, we envision a two-way street of sorts where we could offer merchants our products such as cross-border money transfers or digital content downloads.  Further, we could also offer the acquiring capabilities of PBMA to existing merchant relationships that we have with Ria and ePay.”

REN

REN is in the EFT division and is a modern cloud architecture for payment switching that focuses on Real Time Payments (RTP, think Zelle or Venmo).  Switching software connects credit cards, banks, and merchants, and makes rules-based determinations when a transaction is attempted to be done, whether it's an ATM transaction or a POS transaction. Like Dandelion, they use this software internally but also sell it to banks as a white label solution.

For those familiar with ACIW, this is similar to how ACIW is trying to sell their Real Time Payments technology to banks and countries.  Each country has a payment "scheme" that is built that EEFT could sell to the country (or they build it themselves), and then each bank has their own scheme that then connects to the country’s scheme.  Until the country establishes their own schemes, it is unlikely RTP transactions will build to any real scale at the banking level.

However, certain countries have already rolled this out for some time (the UK and Australia, for instance).  For more background on the Real Time Payments push, ACIW publishes an annual “Prime Time for Real Time” document covering the progress of Real Time Payments by country.

The US is behind, but is targeting mid-2023 for their FedNow roll out, although some RTP infrastructure already exists for the largest banks through a consortium called The Clearing House.  While it's our understanding that FedNow will be homegrown and hence not a direct benefit for Euronet, it will open up the market for REN to be sold to major American banks around the country.  So, it could catalyze the use of REN.  In the meantime, though, REN has been making some real progress towards their $100M incremental profit goal:

“So the very first year that we were really selling REN, which was two years ago, we did about $8 million in revenue at about, call it an 80% margin.  Last year (2022), we did almost twice that.  This year we’re looking to $25-$30 million…so it’s kind of doubling up every year…and understand when we talk about $140 million kind of in the pipeline, these are contracted minimum revenues in the contracts that we’re installing.  So that’s what is exciting about it.  That doesn’t include anything we’re going to- that we would sign this year…our experience has been once we put somebody on our platform, the transactions in almost every case exceeded their expectations.” - CEO on Q4 call 

The business model is to sell a license upfront (that specifies a certain number of transactions to process), and then a "kicker" for each additional transaction.  A customer of REN would then use up the number of transactions in their initial license and would then "buy more" transactions.  While there could be some lumpiness with upfront license fees, over time we believe transaction fees will drive revenue and smooth out this business.

They have made some impressive announcements.  In Q3, for instance, they announced an agreement with the AE Trade Group to develop a “new pan-African payments cross-border switch using our REN payments platform.  The switch will serve as the financial foundation for an initial 44 of the 54 possible countries in the African Continental Free Trade area…Euronet’s REN platform is going to be the real-time cross-border payments switch across Africa.”

Dandelion

Dandelion is reported within the Money Transfer segment.  This is the "rails" by which they are moving much of their Ria remittances but is more geared towards cross-border B2B money transfers. They then can take these rails and license it to FinTechs and banks to use.  It is their home-grown, real time payment processing engine and the "play" is to disrupt the current, archaic SWIFT system which:

A) Is way more expensive

B) Is opaque in tracking the payment

C) Takes a long time for the transfer to fully process, especially to lower volume corridors (e.g., US to the Philippines)

The company claims they have sold agreements with certain fintech players like Xoom/Paypal and Remitly, and recently announced a true reference customer win with HSBC, the sixth largest bank in the world. For these white label deals, they will get a cut of the fee as well as a piece of the Fx arbitrage, although each customer will negotiate their own splits with Euronet (HSBC likely to be lower than smaller players as Euronet wanted to sign a large reference customer).

They claim their differentiation vs. Competitors (Transunion was cited, but certainly Visa, Moneygram, and Western Union among others all have interest) is they have vastly more "termination points" that they have connected to, to allow for Real Time processing.  Both the starting point and the ending point need to be connected to Dandelion for it to work.  Connecting the world will likely never be "finished", although they can capture the vast majority of termination points over the next few years, and already seemingly have an advantage in this area over many competitors.   

This again gets at the heart of the thesis, which is that Euronet has built out a global financial services network with scale that few can match at a global level.

The value proposition does seem strong.  Imagine you are a meat manufacturer in the US, and you are buying industrial equipment from Germany.  In the current SWIFT environment, you likely pay 3-4% of the transaction value to various banks in an opaque multi-bank chain, whereby settlement times can take multiple days or even up to a week.  If someone uses Dandelion, whether it's on their rails through a bank or whether it's Xe, they charge only 60 bps, but it might only cost Dandelion a nickel, so there is still great margin for EEFT.

Given this large difference in fees and the size of the market, the opportunity seems large, but it remains to be seen how they structure deals with banks to capture this, how fast the uptake goes, and whether Dandelion is a winner or someone else is, as well as what percentage they can drive through Xe (probably more profitable) vs. Banks.  

An obvious challenge is just how entrenched the SWIFT system is. It was founded in 1973 and so has been around nearly 50 years.  11,000 banks use it and it is powerful enough that Russia was recently sanctioned by "turning off" its connections to some Russian banks:

https://econofact.org/swift-sanction-on-russia-how-it-works-and-likely-impacts

 It should be noted it is not a non-profit.  Indeed, it is owned by its members.  From the website:

"SWIFT is a cooperative company under Belgian law and is owned and controlled by its shareholders (financial institutions) representing approximately 2,400 Shareholders from across the world."

Management noted that they don’t expect a “gusher” of revenue from Dandelion this year but that it will be contributing “much more” next year.  However, the infrastructure is being built out (temporarily hampering Money Transfer margins) and by all accounts the customer pipeline is building.  We still view this initiative as a call option but one that if successful that could materially move the needle over the next 3-5 years.

Other Notes and Considerations

1) Euronet is suing Visa and Mastercard, providing additional upside optionality

This is still part of our ongoing due diligence, but our understanding is Euronet sued Visa and Mastercard for limiting surcharges that could be put on ATMs in specific countries, with the implication being that Visa and Mastercard are colluding to disallow ATM surcharges across Europe.  This lawsuit has been going on for more than three years but is supposed to go to trial in October.  Although there are a wide variety of potential outcomes including a settlement (they are suing for over $1 billion), if they do win the case, we are told by management that many of their ATM fees could go up by 10x (e.g. $.35 to $3.50/transaction), which would also make them less dependent on higher value Dynamic Currency Conversion charges. 

Although these lawsuits can drag on, there is at least a possibility this gets resolved by the end of the year, which would be a material catalyst.

2) Currency headwinds abating

Although the market should in theory look through currency headwinds, we believe currency was so starkly damaging for EEFT that it significantly obscured the company’s performance and that a reversion in the dollar will make EEFT look more attractive.

Here is their constant currency revenue growth along with headline growth:

Q2-Q4 in particular saw Headline growth come in 900-1300 bps below constant currency growth.  

For the year, headline growth was 7% vs 16% constant currency growth.

EBITDA was even more stark, with 12% growth cited vs. 24% constant currency growth.  The point is, this year things may actually reverse, with headline growth above constant currency growth (which introduces its own set of problems), but the stock should absolutely start screening better.  

3) 2023 consensus estimates feel conservative

The company does not formally issue annual guidance, but they did put out some parameters that, when we drop them into our model, spits out an EPS above $8.00 as compared to current consensus at $7.50.

Embedded within our model are these parameters:

- 24% growth in EFT (based on 25% industry travel growth, although historically they have beaten this given contributions from REN, whose revenues may double)

- 50% incremental margin on revenue growth (down from 57% in 2022)

- 8% ePay growth (guidance of high single digit growth)

- 11% Money Transfer growth (guidance of low double-digit growth)

- 14% Money Transfer EBITDA margins (per guidance of margins rising from 13% last year)

- Flat ePay margins

- Tax rate of 25%

This gets us to over $700M in EBITDA vs consensus of $660 and $8.25 of EPS vs consensus of $7.58.  We believe the sell side is backing into the one piece of guidance EEFT actually gives, which was “mid to high teens EPS growth.”  In the meantime, they have guided to 23% Q1 EPS growth.  

Thoughts On Valuation

EEFT is a tricky company to put a multiple on.  Their primary ePay competitors in the US are both private (although Blackhawk, as mentioned, was bought for 20x EBITDA).  They are running circles around Western Union in Money Transfer but are also more profitable than faster growing digital pure plays like Remitly.  And there really is not, as far as we can tell, another global ATM pureplay to compare EEFT to (primary competition is banks).  We would note that EEFT is fairly capex light and has no net leverage, and has historically traded at near a market multiple.  Here is EEFT’s relative valuation vs. the S&P on an EV/EBITDA NTM basis, which is now near a ten year low:

We welcome feedback on additional comps, but generally believe a 10-12x EBITDA multiple and 16-18x FCF multiple is warranted for a business with this level of scale, balance sheet, and long term growth track record from a solid management team.

Risks

The company’s strengths are also the Risks.  While their navigation of global financial industry regulations creates a moat on some level, they do have to deal with pretty much every global macro factor there is:  inflation, currency, emerging markets, interest rates...all of these things are very real risks that can make forecasting difficult.  There are plenty of “unknown unknown” risks that could derail the thesis.

The company, at this moment, is still dependent on the global travel industry, with tourist ATM transactions still driving a disproportionate share of EBITDA, so another international incident that curbs travel could legitimately hurt their numbers (we might suggest shorting RCL or some other more expensive travel play to hedge out this risk, if concerned)..  However, at the moment we believe travel would have to be significantly curtailed for them to not at least meet their guidance.

Finally, there is certainly the risk that their growth initiatives do not progress at the speed or magnitude that management hopes.  We would argue at current multiples very little success is being built into these initiatives, but if all three were to fall flat on their face there would likely be some downside from these levels.

Summary

We believe this is a very strong management team who has built out a unique global FinTech platform who was blindsided by a once in a generation Black Swan event (COVID lockdowns) that they are still recovering from.  Many of the headwinds in 2020-2022 are now either neutral or flipping into tailwinds, and the company has several “needle moving” growth initiatives that can bear fruit in the 2023-2025 range.  

At 7x EBITDA, we believe the stock is being valued as a collection of secularly challenged assets, ignoring the increasingly clear leveraging of their network base to seamlessly transition to a Digital, Real Time Payments world.  It’s our belief that as the company puts COVID in the rearview mirror and becomes less dependent purely on travel trends, the stock can rerate at least back to its historical average multiple of 11x EBITDA, implying closer to a market multiple of 17x 2024 FCF. This would give the stock 60% upside over the next 12-18 months.  

Catalyst

Earnings beats, more details/KPIs on growth initaitives