Moneygram International Inc (MGI): What’s Driving Sales at this Company?

This will help the company reduce customer attrition, but will impact its bottom line which it believes can be compensated by large volume. The company has taken various initiatives to launch its online and mobile services.

Recently, it has launched bank-to-bank money transfer from US and UK to India. The company has also announced its new product cash to bank money transfer to India. It is expected that the company will expand these offerings in the other corridors in future. These initiatives are likely to create additional transaction volume.

Xoom Corp (NASDAQ:XOOM) is another peer in this field and provides online transaction facility. With the increased penetration of internet and mobile, online transactions have gained in market share in the money transfer services. Xoom Corp (NASDAQ:XOOM)’s revenue increased by 50% in the first quarter compared to the first quarter last year. With more product offerings and innovation, and rapid increase in online and mobile transaction, the company is expected to grow by 40%-50% in the coming year.

Ratio analysis

Looking at the P/S ratio, MoneyGram share look undervalued when compared to its peers. The forward P/E ratio of The Western Union Company (NYSE:WU) looks cheaper. The PEG ratio for both MoneyGram and The Western Union Company (NYSE:WU) look comparable. As Xoom is expected to report negative profit for at least this year, with breakeven expected in 2014, the forward P/E ratio and PEG ratio is not applicable.

Conclusion

Moneygram International Inc (NASDAQ:MGI) has taken various initiatives to expand its product offerings and reach new customers. The company has increased its agents in Africa and India to reach out to more customers. The company has also been investing in online and mobile services. With the expected growth in online transactions, it will help the company grow its customers and revenue. So, at this level the stock is a good buy.

The article What’s Driving Sales at this Company? originally appeared on Fool.com and is written by Lalit Kumar.

Lalit Kumar has no position in any stocks mentioned. The Motley Fool recommends Western Union. Lalit is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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