Edison Investment Research Limited
London, UK, 22 October 2020
EML Payments (EML): Storing up value
EML Payments is a specialist payment solutions provider with a focus on the prepaid market. The group's strategy is to use acquisitions supported by organic development to establish strong positions across a diverse range of use cases and markets. EML now operates in 28 countries and has grown revenues at a five-year CAGR of 53%. While COVID-19 has slowed the pace of growth in the short term, the business is well-funded and remains profitable and cash generative. The launch of Project Accelerator is designed to keep EML at the forefront of innovation in payments technology and to support the company's aim to be 'the fintech's fintech'.
On EV/EBITDA and P/E multiples, EML trades at a discount to global payment processing companies and at a premium to prepaid card companies, reflecting the scale and profitability of the former, and EML's better growth prospects compared to the latter. A reverse DCF analysis implies that the market is not factoring in aggressive growth or margin prospects for the company. Successful implementation of Project Accelerator should drive upside.
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