MoneyGram, Walmart Extend Ties - Analyst Blog
03 10월 2012 - 12:43AM
Zacks
In an attempt sustain its money transfer service growth,
yesterday MoneyGram International Inc. (MGI)
announced the extension of alliance with its largest agent –
Walmart Stores Inc. (WMT) – for another three
years.The new contract will become effective April 2013
onwards.
Accordingly, MoneyGram will continue to offer its prepaid cards
and other financial products along with services including money
transfer, bill payments and money orders in all the Walmart stores
of the US and Puerto Rico. The company’s alliance with Walmart
marks a 13-year relationship; the companies have been working
together since 1999.
The previous agreement with Walmart was last extended in 2008 in
conjunction with MoneyGram's 2008 recapitalization. However, the
previous agreement was scheduled to expire in January 2013.
We believe that a failure to extend this relationship could have
significantly challenged the company financially, given its
relatively high leverage ratio. Moreover, thus far, Walmart is
MoneyGram's largest agent and accounts for approximately 30% of its
total revenue, thereby validating the significance of maintaining
this account.
Further, MoneyGram continues to bolster its position as one of
the leading money transfer companies in the world by constantly
expanding its payment network via alliances. Overall, the company
has a global network of more than 284,000 agent locations in about
196 countries, which primarily include retailers, international
post offices and financial institutions.
Meanwhile, the company is also enhancing its brand awareness by
developing user-friendly payment solutions that suit the new market
trends. With regard to this growth strategy, the company is making
efforts to expand its cash-to-account service to other banks as
well as add new online services.
Additionally, MoneyGram continues to explore new growth avenues
in untested locations by incorporating latest and flexible
technology that facilitates transfers through mobile phones,
prepaid cards or ATMs, in order to speed up its money transfer
services and enhance the remittance volumes. This growth strategy
also justifies management’s guidance of 7–9% top-line growth for
2012.
The aggressive business developments are also crucial for
MoneyGram to maintain its competitive edge, particularly against
the steady global growth of its arch-rival Western Union
Co. (WU). The company carries a Zacks Rank #4, which
translates into a short-term Sell rating, while the long-term
stance remains Neutral.
MONEYGRAM INTL (MGI): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis Report
WESTERN UNION (WU): Free Stock Analysis Report
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