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Western Union (WU) Up 6.9% in Past Month: Can It Grow Higher?
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The Western Union Company’s (WU - Free Report) shares have jumped 6.9% in the past month compared with the industry’s 6.2% increase, thanks to higher usage of digital payments. The company is expected to continue growing due to faster economic recovery and greater exposure. Its strategic moves and alliances will pave the way for higher returns in the future.
Image Source: Zacks Investment Research
Headquartered in Denver, CO, Western Union is a leader in global money transfer. It has a market cap of $7.2 billion and provides services like international cross-border and intra-country transfers. It has a massive footprint in more than 200 countries and territories.
Can It Retain Momentum?
The answer is yes and before we get into the details, let us show you how its estimates for 2022 stand. The Zacks Consensus Estimate for earnings per share for the current year stands at $1.94. WU beat earnings estimates in three of the last four quarters and missed once, with an average surprise of 7.3%. The Zacks Consensus Estimate for revenues for the current year is pegged at $4.7 billion.
Concurrent with fourth-quarter 2021 results, management provided a glimpse of 2022 guidance. Adjusted operating profit margin is expected in the band of 21-22%. Adjusted earnings per share are projected between $1.90 and $2.00. Management expects flat to low-single-digit increase in adjusted revenues for 2022.
Now let’s delve into what’s driving the Zacks Rank #3 (Hold) stock.
Western Union enjoys a robust digital arm, thanks to several digital partnerships and investments. The company is building a solid digital services portfolio and digitizing the money movement process for clients. Strategic alliances strengthen its footprint in different parts of the world. The company is equipped with payout processing capabilities in more than 130 currencies.
WU is focusing on high-growth areas like Indo-Pacific, Asia and other regions. It recently collaborated with Indonesia’s Artajasa to ease bank account and wallet payouts for customers across the country. WU extended its longstanding ties with the leading non-bank financial institution of the Philippines, M Lhuillier, to provide digital money transfer services. It partnered with Korea’s well-established fintech company Travel Wallet to offer enhanced money transfer services for the Travel Wallet App users in South Korea. These strategic partnerships are also expected to boost Western Union’s footprint in the remittance space.
WU is also enhancing the efficiency of operations and remains on track to achieve annual cost savings of $150 million by 2022. Its total expenses decreased 7% in the last reported quarter from the year-ago level to $968 million. This will lead to a consistent increase in the bottom line.
Management’s decision to divest the Business Solutions segment to focus on further penetration in the global cross-border consumer payments market is a prudent one. Moves like this help the company increase profitability. Previously, it divested the Speedpay and Paymap mortgage payments services businesses. While the first closing of the Business Solutions divestment is completed and it received $910 million worth of cash, the second phase is likely to close in the second half of this year.
Risks
Despite the upside potential, there are a few factors that are impeding Western Union’s growth lately. A high debt level, reducing cash balance and intensifying competition are major headwinds. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Based in McLean, VA, Primis Financial boasts an impressive earnings surprise history, with the average four-quarter surprise being 27.8%. Primis Financial’s 2022 earnings estimate of $1.06 per share has witnessed two upward revisions in the past 60 days compared with none in the opposite direction.
Burford Capital, headquartered in Saint Peter Port, Guernsey, has witnessed one upward earnings estimate revision in the past 60 days against none in the opposite direction. The Zacks Consensus Estimate for Burford Capital’s bottom line for the current year is pegged at 90 cents per share, indicating a 372.7% year-over-year rise.
Headquartered in San Antonio, TX, Usio beat earnings estimates in three of the last four quarters and met once, with the average surprise being 93.8%. The Zacks Consensus Estimate for USIO’s bottom line for the current year is pegged at 13 cents per share, indicating an improvement from a loss of 2 cents.
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Western Union (WU) Up 6.9% in Past Month: Can It Grow Higher?
The Western Union Company’s (WU - Free Report) shares have jumped 6.9% in the past month compared with the industry’s 6.2% increase, thanks to higher usage of digital payments. The company is expected to continue growing due to faster economic recovery and greater exposure. Its strategic moves and alliances will pave the way for higher returns in the future.
Image Source: Zacks Investment Research
Headquartered in Denver, CO, Western Union is a leader in global money transfer. It has a market cap of $7.2 billion and provides services like international cross-border and intra-country transfers. It has a massive footprint in more than 200 countries and territories.
Can It Retain Momentum?
The answer is yes and before we get into the details, let us show you how its estimates for 2022 stand. The Zacks Consensus Estimate for earnings per share for the current year stands at $1.94. WU beat earnings estimates in three of the last four quarters and missed once, with an average surprise of 7.3%. The Zacks Consensus Estimate for revenues for the current year is pegged at $4.7 billion.
Concurrent with fourth-quarter 2021 results, management provided a glimpse of 2022 guidance. Adjusted operating profit margin is expected in the band of 21-22%. Adjusted earnings per share are projected between $1.90 and $2.00. Management expects flat to low-single-digit increase in adjusted revenues for 2022.
Now let’s delve into what’s driving the Zacks Rank #3 (Hold) stock.
Western Union enjoys a robust digital arm, thanks to several digital partnerships and investments. The company is building a solid digital services portfolio and digitizing the money movement process for clients. Strategic alliances strengthen its footprint in different parts of the world. The company is equipped with payout processing capabilities in more than 130 currencies.
WU is focusing on high-growth areas like Indo-Pacific, Asia and other regions. It recently collaborated with Indonesia’s Artajasa to ease bank account and wallet payouts for customers across the country. WU extended its longstanding ties with the leading non-bank financial institution of the Philippines, M Lhuillier, to provide digital money transfer services. It partnered with Korea’s well-established fintech company Travel Wallet to offer enhanced money transfer services for the Travel Wallet App users in South Korea. These strategic partnerships are also expected to boost Western Union’s footprint in the remittance space.
WU is also enhancing the efficiency of operations and remains on track to achieve annual cost savings of $150 million by 2022. Its total expenses decreased 7% in the last reported quarter from the year-ago level to $968 million. This will lead to a consistent increase in the bottom line.
Management’s decision to divest the Business Solutions segment to focus on further penetration in the global cross-border consumer payments market is a prudent one. Moves like this help the company increase profitability. Previously, it divested the Speedpay and Paymap mortgage payments services businesses. While the first closing of the Business Solutions divestment is completed and it received $910 million worth of cash, the second phase is likely to close in the second half of this year.
Risks
Despite the upside potential, there are a few factors that are impeding Western Union’s growth lately. A high debt level, reducing cash balance and intensifying competition are major headwinds. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Key Picks
Some better-ranked players in the Finance space include Primis Financial Corp. (FRST - Free Report) , Burford Capital Limited (BUR - Free Report) and Usio, Inc. (USIO - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Based in McLean, VA, Primis Financial boasts an impressive earnings surprise history, with the average four-quarter surprise being 27.8%. Primis Financial’s 2022 earnings estimate of $1.06 per share has witnessed two upward revisions in the past 60 days compared with none in the opposite direction.
Burford Capital, headquartered in Saint Peter Port, Guernsey, has witnessed one upward earnings estimate revision in the past 60 days against none in the opposite direction. The Zacks Consensus Estimate for Burford Capital’s bottom line for the current year is pegged at 90 cents per share, indicating a 372.7% year-over-year rise.
Headquartered in San Antonio, TX, Usio beat earnings estimates in three of the last four quarters and met once, with the average surprise being 93.8%. The Zacks Consensus Estimate for USIO’s bottom line for the current year is pegged at 13 cents per share, indicating an improvement from a loss of 2 cents.