There are some small-cap companies that really could not have been founded outside of their home countries. One unique to the country of Russia is the payment system Qiwi plc, (QIWI). It is unique in that the company caters to the widespread fear within Russia concerning putting credit card information or other personal details on the web. Qiwi allows Russian citizens to use cash kiosks for digital payments, while avoiding putting potentially damning personal information online.
While most the world over, cash is still king, it’s hard to imagine a cash-to-digital payment processing service gaining a terrible amount of traction, let alone growing to a market cap of $1.51 billion as Qiwi has, outside of Russia. But since being founded in 2004, Qiwi has done just that, capitalizing on Russian’s general distrust of non-cash payment systems.
However, it’s not all dollar signs for Qiwi in 2014. The company’s stock has fallen 49.14 percent this year, thanks to underwhelming revenues and earnings growth. Likewise, the company faces competition from aggressive competitor PayPal, who has begun expanding into Russia last year.
While there are some troublesome elements concerning Qiwi, and analysts have recently slashed FY EPS projections a full penny, looking at Qiwi’s fundamentals reveals the company’s sharp pullback might be unwarranted, and there could be room for rebound.
Qiwi’s forward P/E is at 14.88, certainly on the lower side for a small-cap financial play. The company also sports a price-to-cash and a price-to-book ratio far above 1. Their ROI is at 30 percent, which is much higher than comparable companies. And despite downward revised EPS estimates, the company’s 2014 EPS is still expected to be 67.6 percent higher than last year’s.
How the company fares as they react to both continued turmoil within Russia and the necessity to expand outside of Russia remains to be seen. But they’re certainly an interesting play, and as one of the more volatile small cap financial plays on the market, worth paying attention to either way.
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