International Money Express (IMXI) — known as Intermex — is a rapidly growing processor of money transfer services in the U.S. and Canada, Latin America and the Caribbean and more than 40 other countries, observes Doug Gerlach, editor of SmallCap Informer.

Intermex provides these services through a network of more than 100,000 payer locations in third-party owned and operated retail stores, banks, and agents, and also through company-operated stores, website, and mobile application.

The physical presence offered by the company is key to its success with its user base. Unlike other digital payment solutions many of its customers require the ability to convert and transfer currency and paper checks. The company has spent years building its retail network, providing for a large moat that would be difficult for others to replicate.

Meanwhile, the firm has been aggressively building its Digital offerings, with digitally originated transactions growing 41.6% in the latest quarter. Management points to high user acceptance of the its iPhone app, rated 4.8 (out of 5) stars in the App Store.

Intermex’s strong cash generation allows the company to invest more quickly in new growth products such as reloadable cards such as pre-paid debit and direct deposit payroll cards.

In December 2023, the company teamed up with Visa (V) to allow customers to transfer money using the iPhone app to and from 20 countries previously unserved by Intermex, using either eligible Visa cards or bank accounts in those countries. The company is looking towards new markets, including India and the Philippines, that can be served by the Visa partnership.

For the 2023 fiscal year, revenues climbed 19.8% over 2022. EPS moved up 10.1%, held back by acquisition expenses which are now largely concluded, and by some competitive headwinds.

For full-year 2024, Intermex expects revenues of $681.0 million to $701.8 million and EPS of $1.81 to $1.96. We believe Intermex can deliver future revenue growth of 12.0% a year and EPS growth of 14.0% on average through 2028, supported by some margin improvements and share buybacks.

From its current P/E of 13.1, we see the stock as able to support a high P/E of 18.2, which would indicate a future high price of $57. On the downside, a retreat to a low P/E of 10.3 would suggest a low price of $17. The reward/risk ratio is 7.8-to-1, with an annualized 21.7% total return possible. Buy up to $27.

Subscribe to Small Cap Infomer here…