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Why Western Union (WU) Should be on Your Investment Radar
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The Western Union Company (WU - Free Report) is poised for growth, leveraging increasing transaction volumes and resilience in its Branded Digital business. The company's improving performance in Latin America, the Caribbean, South Asia and other regions further bolsters its growth prospects. Additionally, Western Union's operational margins and strong dividend yield present a compelling investment opportunity.
Headquartered in Denver, CO, WU is a leader in global money transfer. It currently has a market cap of $4.4 billion. Now, let’s take a look at its recent price performance to gauge investor sentiment toward the stock.
Price Performance
Over the year-to-date period, Western Union shares have gained 6.9%, surpassing the industry's 2.5% increase. Notably, its forward 12-month price-to-earnings ratio of 7.1X is significantly lower than the industry average of 22X, indicating that the stock is more affordable.
Image Source: Zacks Investment Research
Due to its solid prospects, this currently Zacks Rank #2 (Buy) stock presents an attractive investment opportunity for investors at the moment. Also, it currently has a VGM Score of B, where V stands for Value, G stands for Growth and M stands for Momentum. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Western Union’s current-year earnings is pegged at $1.76 per share, which has witnessed seven upward estimate revisions in the past 60 days against none in the opposite direction. The estimate indicates an increase of 1.2% from the year-ago period. WU beat on earnings in all the last four quarters, the average surprise being 15.7%.
Furthermore, we expect its operational margins will benefit from reduced service costs and SG&A expenses. We project a nearly 5% year-over-year decline in total operating expenses for 2024. The company's Global Strategy, focused on driving efficiency, profitability, and long-term revenue growth, is expected to play a pivotal role in achieving these objectives.
The consensus estimate for Western Union’s current-year revenues stands at nearly $4.2 billion. We expect its Consumer Services business to play a significant role in revenue generation. Our model suggests that revenues from the segment will jump 10% year over year in 2024.
Its attractive dividend yield can also garner investor interest. The metric currently stands at 7.4%, much higher than the industry average of 0.8%. In the first quarter, Western Union rewarded its shareholders with $80 million in dividend payments and share buybacks worth $150 million. As of Mar 31, 2024, it had $198.2 million share repurchase authorization left through 2024-end.
A Risk
However, there is a factor that investors should keep a careful eye on.
WU’s levered balance sheet is concerning. Its total debt-to-total capital of 86.5% at the first-quarter end is significantly higher than the industry’s figure of 40.6%. Nevertheless, we believe that its systematic and strategic plan of action will drive growth and improve profitability further in the long term.
Other Key Picks
Investors interested in the broader Business Services space can look at some other top-ranked stocks like Global Payments Inc. (GPN - Free Report) , Paysafe Limited (PSFE - Free Report) and WEX Inc. (WEX - Free Report) , each carrying a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Global Payments’ 2024 earnings is currently pegged at $11.63 per share, indicating 11.6% year-over-year growth. It beat estimates in each of the past four quarters with an average surprise of 1.1%. The consensus mark for GPN’s revenues of $9.2 billion suggests a 6.4% increase from the year-ago level.
The Zacks Consensus Estimate for Paysafe’s current-year earnings is now pegged at $2.47 per share, indicating 6% year-over-year growth. It beat earnings estimates thrice in the past four quarters and missed once, with an average surprise of 18.3%. The consensus mark for PSFE’s revenues of $1.7 billion suggests a 6.5% increase from the year-ago level.
The Zacks Consensus Estimate for WEX’s 2024 earnings of $16.26 per share suggests 9.8% year-over-year growth. It beat earnings estimates thrice in the past four quarters and missed once, with an average surprise of 3.3%. The consensus estimate for WEX’s current year revenues is pegged at $2.7 billion, indicating a 7.6% increase from a year ago.
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Why Western Union (WU) Should be on Your Investment Radar
The Western Union Company (WU - Free Report) is poised for growth, leveraging increasing transaction volumes and resilience in its Branded Digital business. The company's improving performance in Latin America, the Caribbean, South Asia and other regions further bolsters its growth prospects. Additionally, Western Union's operational margins and strong dividend yield present a compelling investment opportunity.
Headquartered in Denver, CO, WU is a leader in global money transfer. It currently has a market cap of $4.4 billion. Now, let’s take a look at its recent price performance to gauge investor sentiment toward the stock.
Price Performance
Over the year-to-date period, Western Union shares have gained 6.9%, surpassing the industry's 2.5% increase. Notably, its forward 12-month price-to-earnings ratio of 7.1X is significantly lower than the industry average of 22X, indicating that the stock is more affordable.
Image Source: Zacks Investment Research
Due to its solid prospects, this currently Zacks Rank #2 (Buy) stock presents an attractive investment opportunity for investors at the moment. Also, it currently has a VGM Score of B, where V stands for Value, G stands for Growth and M stands for Momentum. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Western Union’s current-year earnings is pegged at $1.76 per share, which has witnessed seven upward estimate revisions in the past 60 days against none in the opposite direction. The estimate indicates an increase of 1.2% from the year-ago period. WU beat on earnings in all the last four quarters, the average surprise being 15.7%.
Furthermore, we expect its operational margins will benefit from reduced service costs and SG&A expenses. We project a nearly 5% year-over-year decline in total operating expenses for 2024. The company's Global Strategy, focused on driving efficiency, profitability, and long-term revenue growth, is expected to play a pivotal role in achieving these objectives.
The consensus estimate for Western Union’s current-year revenues stands at nearly $4.2 billion. We expect its Consumer Services business to play a significant role in revenue generation. Our model suggests that revenues from the segment will jump 10% year over year in 2024.
Its attractive dividend yield can also garner investor interest. The metric currently stands at 7.4%, much higher than the industry average of 0.8%. In the first quarter, Western Union rewarded its shareholders with $80 million in dividend payments and share buybacks worth $150 million. As of Mar 31, 2024, it had $198.2 million share repurchase authorization left through 2024-end.
A Risk
However, there is a factor that investors should keep a careful eye on.
WU’s levered balance sheet is concerning. Its total debt-to-total capital of 86.5% at the first-quarter end is significantly higher than the industry’s figure of 40.6%. Nevertheless, we believe that its systematic and strategic plan of action will drive growth and improve profitability further in the long term.
Other Key Picks
Investors interested in the broader Business Services space can look at some other top-ranked stocks like Global Payments Inc. (GPN - Free Report) , Paysafe Limited (PSFE - Free Report) and WEX Inc. (WEX - Free Report) , each carrying a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Global Payments’ 2024 earnings is currently pegged at $11.63 per share, indicating 11.6% year-over-year growth. It beat estimates in each of the past four quarters with an average surprise of 1.1%. The consensus mark for GPN’s revenues of $9.2 billion suggests a 6.4% increase from the year-ago level.
The Zacks Consensus Estimate for Paysafe’s current-year earnings is now pegged at $2.47 per share, indicating 6% year-over-year growth. It beat earnings estimates thrice in the past four quarters and missed once, with an average surprise of 18.3%. The consensus mark for PSFE’s revenues of $1.7 billion suggests a 6.5% increase from the year-ago level.
The Zacks Consensus Estimate for WEX’s 2024 earnings of $16.26 per share suggests 9.8% year-over-year growth. It beat earnings estimates thrice in the past four quarters and missed once, with an average surprise of 3.3%. The consensus estimate for WEX’s current year revenues is pegged at $2.7 billion, indicating a 7.6% increase from a year ago.