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What's in Store for Western Union (WU) Earnings in Q1?
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The Western Union Co. (WU - Free Report) is set to report first-quarter 2021 earnings on May 4, after the market closes.
In the last reported quarter, the company’s earnings of 45 cents per share surpassed the Zacks Consensus Estimate by 7.14% and also grew 18.4% year over year. Earnings improved year over year on a lower effective tax rate, productivity and cost savings, and lower share count, partly offset by revenue weakness.
Let’s see how things have been shaping up for this announcement.
Management had earlier predicted that the first quarter of 2021 will be the softest period from a year-over-year growth perspective during which, total company constant currency revenue growth may be similar to the level recorded for the fourth quarter of 2020.
The company’s C2C (Consumer-to-Consumer) business showed anemic revenue growth in the previous quarters. During 2020, revenues from the segment declined 4% year over year due to significant disruption from the COVID-19 pandemic. The business remains highly affected by competition from other fintech players that have the ability to provide services at low cost. Moreover, pricing action taken in some markets put revenues under pressure. The World Bank presently predicts a 7% decline in remittances for 2021. This downtrend is likely to have weighed on the segment’s revenues in the to-be-reported quarter.
Western Union has been making heavy investments in its digital money transfer arm and building a leading omni-channel platform, which yielded results for the company amid the COVID-induced turmoil. Digital partnerships and constant investments provided a boost to the company’s digital revenues. Based on a robust digital suite, management expects current-year digital revenues to reach around $1 billion, thereby indicating the wave of optimism surrounding the company’s digital business. We thus expect to see increased contribution from the company’s digital platform in the to-be-reported results. Per the Zacks Consensus Estimate operating revenue in the C2C segment is pegged at $1.03 billion up 1.3% from the year ago reported figure.
Western Union’s Business Solution segment has been witnessing revenue declines since the past many years except for the year 2019 when it grew 4%. The same was again down 8% during 2020. Revenue weakness was the result of dwindled cross-border trade and the adverse impact of the pandemic on education, travel and tourism as well as small and medium-sized enterprises. Therefore, this segment is likely to have remained stressed through first-quarter 2021. Per the Zacks Consensus Estimate operating revenue in this segment is pegged at $91 million down 7.1% from the year ago reported figure.
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.
The company resumed share repurchases in the first quarter of 2021, which might have driven its bottom line during the period.
Q1 Earnings and Revenue Estimates
The Zacks Consensus Estimate for the company’s first-quarter earnings per share is pegged at 45 cents, indicating an increase of 2.27% from the year-ago period’s reported figure. The consensus mark for the same-period revenues stands at $1.20 billion, suggesting a 0.95% 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 12.41%.
Our proven model does not predict 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 but this is not the case here.
Earnings ESP: Western Union has an Earnings ESP of -3.97%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Some stocks worth considering with the apt combination of elements to surpass estimates this reporting cycle are as follows:
Intercorp Financial Services Inc. (IFS - Free Report) has an Earnings ESP of +6.77% and a Zacks Rank #2, currently.
Fidelity National Information Services, Inc. (FIS - Free Report) has an Earnings ESP of +2.01% and a Zacks Rank of 3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
PayPal Holdings, Inc. (PYPL - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank of 3, currently.
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What's in Store for Western Union (WU) Earnings in Q1?
The Western Union Co. (WU - Free Report) is set to report first-quarter 2021 earnings on May 4, after the market closes.
In the last reported quarter, the company’s earnings of 45 cents per share surpassed the Zacks Consensus Estimate by 7.14% and also grew 18.4% year over year. Earnings improved year over year on a lower effective tax rate, productivity and cost savings, and lower share count, partly offset by revenue weakness.
Let’s see how things have been shaping up for this announcement.
Management had earlier predicted that the first quarter of 2021 will be the softest period from a year-over-year growth perspective during which, total company constant currency revenue growth may be similar to the level recorded for the fourth quarter of 2020.
The company’s C2C (Consumer-to-Consumer) business showed anemic revenue growth in the previous quarters. During 2020, revenues from the segment declined 4% year over year due to significant disruption from the COVID-19 pandemic. The business remains highly affected by competition from other fintech players that have the ability to provide services at low cost. Moreover, pricing action taken in some markets put revenues under pressure. The World Bank presently predicts a 7% decline in remittances for 2021. This downtrend is likely to have weighed on the segment’s revenues in the to-be-reported quarter.
Western Union has been making heavy investments in its digital money transfer arm and building a leading omni-channel platform, which yielded results for the company amid the COVID-induced turmoil. Digital partnerships and constant investments provided a boost to the company’s digital revenues. Based on a robust digital suite, management expects current-year digital revenues to reach around $1 billion, thereby indicating the wave of optimism surrounding the company’s digital business. We thus expect to see increased contribution from the company’s digital platform in the to-be-reported results. Per the Zacks Consensus Estimate operating revenue in the C2C segment is pegged at $1.03 billion up 1.3% from the year ago reported figure.
Western Union’s Business Solution segment has been witnessing revenue declines since the past many years except for the year 2019 when it grew 4%. The same was again down 8% during 2020. Revenue weakness was the result of dwindled cross-border trade and the adverse impact of the pandemic on education, travel and tourism as well as small and medium-sized enterprises. Therefore, this segment is likely to have remained stressed through first-quarter 2021. Per the Zacks Consensus Estimate operating revenue in this segment is pegged at $91 million down 7.1% from the year ago reported figure.
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.
The company resumed share repurchases in the first quarter of 2021, which might have driven its bottom line during the period.
Q1 Earnings and Revenue Estimates
The Zacks Consensus Estimate for the company’s first-quarter earnings per share is pegged at 45 cents, indicating an increase of 2.27% from the year-ago period’s reported figure. The consensus mark for the same-period revenues stands at $1.20 billion, suggesting a 0.95% 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 12.41%.
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 does not predict 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 but this is not the case here.
Earnings ESP: Western Union has an Earnings ESP of -3.97%. 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Some stocks worth considering with the apt combination of elements to surpass estimates this reporting cycle are as follows:
Intercorp Financial Services Inc. (IFS - Free Report) has an Earnings ESP of +6.77% and a Zacks Rank #2, currently.
Fidelity National Information Services, Inc. (FIS - Free Report) has an Earnings ESP of +2.01% and a Zacks Rank of 3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
PayPal Holdings, Inc. (PYPL - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank of 3, currently.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>