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What's in Store for Western Union's (WU) Earnings in Q4?

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The Western Union Co. (WU - Free Report) is set to report fourth-quarter 2020 earnings on Feb 10, after the market closes.

In the last reported quarter, the company’s earnings of 57 cents per share surpassed the Zacks Consensus Estimate by 21.28%. However, the bottom line fell 16.3% year over year. Earnings reflected gains from the company’s productivity initiatives, additional cost savings and a lower effective tax rate as well as share count, partially offset by revenue declines.

Let’s see how things have been shaping up for this announcement.

In the company’s Consumer-to-Consumer segment (C2C), business is likely to have been driven by higher retail money transfer, led by improving transaction trends and strong growth in principle per transaction. The company’s digital business is likely to have stayed elevated. The company’s network quality and scale continue to be an important differentiator that allows it to attract and retain customers, who choose to make transactions at a physical location or digitally, more efficiently.

The company’s digital channels consistently perform exceptionally well at both westernunion.com and digital partnerships. Digital money transfer transactions grew 96% in the third quarter, reaching new heights for both westernunion.com and digital partnerships, a trend that most likely continued in the fourth quarter as well.

Another business segment Business Solutions (constituting 7% of 2019 revenues) is likely to report weak revenues due to softening trends in the verticals widely exposed to COVID-19, which include education, travel and tourism, and small and medium-sized enterprises.

The company’s margins are expected to have been aided by targeted productivity savings and expense management, led by the WU Way lean program and organizational efficiencies.

Q4 Earnings and Revenue Estimates

The Zacks Consensus Estimate for the company’s fourth-quarter earnings per share is pegged at 42 cents, indicating an increase of 10.53% from the year-ago period’s reported figure. The consensus mark for same-period revenues stands at $1.26 billion, suggesting a 3.46% decline from the year-earlier quarter’s reported number.

Earnings Surprise History

The company’s bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters (missing the mark in one), the average beat being 7.72%.

The Western Union Company Price and EPS Surprise

The Western Union Company Price and EPS Surprise

The Western Union Company price-eps-surprise | The Western Union Company Quote

What Our Quantitative Model Predicts

Our proven model predicts an earnings beat for Western Union this time around. The combination of a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Western Union has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Western Union carries a Zacks Rank #3, currently.

Stocks to Consider

Some stocks worth considering with the apt combination of elements to surpass estimates this reporting cycle are as follows:

Equifax, Inc. (EFX - Free Report) has an Earnings ESP of +1.44% and a Zacks Rank #3, currently.

Virtu Financial, Inc. (VIRT - Free Report) has an Earnings ESP of +1.24% and a Zacks Rank of 3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ares Management Corporation (ARES - Free Report) has an Earnings ESP of +0.90% and is Zacks #3 Ranked, currently.

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