AT EML Payments Ltd The share price (ASX: EML) is skyrocketing again today, with EML up another 4.4% today as of this writing to $ 5.63 a share. It looks like this is the second day in a row that the price of EML shares has risen significantly.
EML shares hit a new all-time high of $ 5.80 yesterday. This new high is finally pushing the EML above its COVID highs. Even after cooling off from these highs, EML shares are up 10.7% since yesterday morning and 16.12% since last Thursday. This also means that EML shares are now up a whopping 257% since March 23 last year, and 33% in 2021 alone.
So who are EML Payments? And why does this company’s stock continue to skyrocket?
Who is the company?
EML Payments is … a payment company specializing in prepaid debit cards. These cards can be used for anything from a gift card to a paycheck package to a cash card for casino use. EML operates throughout Australia as well as North America and Europe. The company’s payment platform is tightly integrated with the US payment giant. Mastercard Inc (NYSE: MA) in particular. EML works with a number of large clients including the Queensland government, Ladbrokes, Sportsbet, bet365, Shell Canada and Harley Davidson.
The company has been doing very well lately. In its income statement for the 6 months ended December 31, February, EML reported a 61% increase in revenue to $ 95.3 million on a gross debit volume of $ 10.2 billion (a 54% increase). The company also reported a 30% increase in net income after tax to $ 13.2 million. The company expects this growth to continue with revenues of $ 180 million to $ 190 million and net income of $ 30 million to $ 33.5 million in fiscal 2021.
Why are EML stocks shooting at the moon today?
As mentioned above, EML shares have been in demand since the company reported earnings back in February. But investors have indeed stepped on gas over the past week. The likely catalyst for this recent optimism was yesterday’s announcement by the company.
EML announced a major acquisition ahead of the market opening. The company will fully acquire Sentinal Limited through a binding share purchase agreement. Sentinal is a European company specializing in inter-account payments and open banking. EML’s management has advised investors that the acquisition of Sentinel will expand EML’s product line to include non-card payments on its platform, as well as other positive synergies.
EML will pay 70 million euros for the transaction, plus a “profit component of up to 40 million euros”. The acquisition will be financed through a combination of EUR 38.9 million in cash and a EUR 31.1 million share issue in EML.
Judging by the dynamics of the EML stock quotes since yesterday morning, it is clear that investors welcomed this deal. At the current share price of EML, the company has a market capitalization of $ 2.05 billion.
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Sebastian Bowen owns Mastercard shares. Parent company Motley Fool Australia Motley Fool Holdings Inc. owns and recommends shares in EML Payments and Mastercard. Motley Fool Australia recommended EML and Mastercard payments. Motley Fool has a disclosure policy. This article contains general investment advice only (in accordance with AFSL 400691). Courtesy of Bruce Jackson.