Voss Value Funds: Euronet ($EEFT) Investment Case
Voss Value Funds: Euronet ($EEFT) Investment Case
Introduction In their Q4 2024 investor letter, Voss Value Funds presents their investment thesis for Euronet Worldwide Inc. ($EEFT), highlighting it as a significantly undervalued position with strong growth potential. Voss Value, which returned +9.6% and +9.5% to investors net of fees in Q4 2024 for their LP and Offshore Fund respectively (compared to +0.3% for the Russell 2000), identifies Euronet as a compelling opportunity despite market concerns. The letter emphasizes how Euronet’s stock has been beaten down to an all-time low valuation based on misplaced fears, creating what Voss believes is an attractive entry point for investors.
Investment Highlight: Euronet ($EEFT)
Business Overview
- Global electronic payment services provider
- Operates through multiple segments including EFT (Electronic Funds Transfer)/ATM business
- Owns Ria money transfer service (international remittance business)
- Has newer growth businesses including Merchant Services, REN (real-time payments software), and Dandelion (B2B cross-border payments technology)
Market Position
- Trading at historical low valuation (~5.4x 2026 EBITDA and 9x 2026 earnings)
- Positioned to benefit from regulatory changes affecting ATM take rates
- Transitioning from perception as a “cash-based business” to a fintech company
- ATM segment now represents only 19% of revenue (down from much higher historically)
Performance Analysis
- ATM Business Evolution:
- EFT segment generating >50% rolling incremental EBITDA margins
- ATM segment now only 35% of EBITDA (down from >60% in 2019)
- Settlement of antitrust lawsuit with Visa and Mastercard creating opportunity for increased fees
- Countries beginning to formally allow more surcharges on ATMs
- Growth Segments:
- Acquired Merchant Services business from Piraeus Bank in Greece
- REN (real-time payments software) gaining traction
- Dandelion (B2B cross-border payments) showing promise
- Ria aggressively transitioning from “brick-and-mortar” to “digital” money remittances
Management Outlook
- Historically conservative management team showing increased optimism
- Raised guidance framework from “10-15% EPS growth” to “12-16%” for 2025
- Higher tax year expected (high 20s vs ~24% historically)
- Adjusted guidance implies at least 14-15% EBITDA growth and 10% revenue growth
Valuation Analysis
- Voss values Euronet with a Base Case EV/EBITDA multiple of 9x
- Conservative 13x 2026 EPS for projected 13-20% EPS growth
- Bull Case scenario: Return to historical multiples (15-20x NTM earnings)
- Bull Case price target of $170 (15x P/E)
- Potential 116% upside if REN and Dandelion gain traction (20x NTM earnings)
Market Misconceptions
- Overblown fears about Trump administration’s immigration policies affecting Ria
- Misunderstanding of US-Mexico corridor importance (small piece of overall business)
- Mischaracterization as a “secular decliner” rather than evolving fintech company
- Underappreciation of take rate tailwinds in the ATM segment
Catalysts
- Increased disclosures around growth businesses’ contributions throughout 2025
- Narrative shift from “cash-based business” to “leading edge fintech company”
- Regulatory benefits allowing increased ATM surcharges (100% pretax margins)
- Re-acceleration of growth across revenue, EBITDA, and operating income
Voss Value Funds views Euronet as an undervalued opportunity with significant re-rating potential over the duration of 2025, citing its consistent execution, forecasted growth re-acceleration, and improving business mix as key factors supporting their bullish outlook.
