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Significant populations of the world live their day-to-day lives without access to traditional banking and rely on commercial services to pay bills, cash checks, and send funds to family members, often internationally. International Money Express (IMXI) — which operates as Intermex — is a leading provider of money transfer services that allow users to send funds within the U.S., Africa, Central and South America, and the Caribbean.

The company’s services include a suite of financial processing solutions and payment services; online payment options; pre-paid debit cards; and direct deposit payroll cards. It provides services through a network of more than 100,000 payer locations in retail stores, banks, agents, and company-operated stores, as well as through online and mobile devices.

Many locations also provide check-cashing services, money orders, and bill payment services for phone, cellular, cable, electric, gas, and water companies.

The company was founded in 1994 and is headquartered in Miami, Fla., with international offices in Mexico and Guatemala. It went public via a special purpose acquisition company (SPAC) merger in 2018. Since 2015, revenues have grown at an annualized 27.1% rate, reaching $319.6 million in fiscal 2019.

The two largest remittance corridors Intermex serves are the U.S. to Mexico and the U.S. to Guatemala. Management also believes that there is significant room to grow its business in under-served geographic regions in the Latin American and Caribbean corridor where there is high demand.

In 2019, Intermex achieved 21% and 46% growth in remittance volume to newer markets of El Salvador and Honduras, respectively, compared to 2018. Legacy competitors like Western Union (WU) try to be ubiquitous and have locations in a large number and with a wide variety of businesses (such as grocery stores).

Intermex’s approach is to target particular zip codes where demand for its services is highest, and this means that its agents deliver significantly higher average number of transactions, which in turn improves margins. Intermex is in the initial stages of rolling out its digital applications and expects that these tools will deliver future growth as the customer base evolves. We see Intermex delivering future revenue growth of 14.0% a year and EPS growth of 16.0%.

From its P/E of 18.6, we see the company able to support a high P/E of 24.0, which would indicate a future high price of $39. On the downside, a retreat to a low P/E of 12.0 would suggest a low price of $6. The reward/risk ratio using these prices is 3.0-to-1, with an annualized 22.1% total return possible.