MoneyGram (MGI) shares soared 9.3% in the last trading session to close at $9.61. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock’s 13.9% gain over the past four weeks.
The driving factor for the price rise can probably be linked to acquisition rumors, which got a spark from a report published by Reuters (quoting anonymous sources) last week. The report further stated about three private equity firms (Advent International Corp, Madison Dearborn Partners and Siris Capital Group) extending offers to acquire MoneyGram. However, no deal has been finalized yet. A strong digital platform, which MoneyGram has devised on the back of extensive investments and several alliances with well-established financial institutions over the passage of time, might have triggered the interests of companies in buying it.
This money transfer company is expected to post quarterly earnings of $0.13 per share in its upcoming report, which represents a year-over-year change of +8.3%. Revenues are expected to be $325 million, up 0.5% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For MoneyGram, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock’s price usually doesn’t keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on MGI going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>
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