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Will Western Union's (WU) Q2 Profits Wire Up or Break Down?
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The Western Union Company (WU - Free Report) is set to report its second-quarter 2024 results on Jul 30, after the closing bell.
The Zacks Consensus Estimate for second-quarter earnings is currently pegged at 44 cents per share, implying a decline of 13.7% from the year-ago reported number. The estimate remained stable over the past month. The Zacks Consensus Estimate for second-quarter revenues is currently pegged at almost $1.1 billion, suggesting a 9.4% fall from the year-ago actuals.
Image Source: Zacks Investment Research
Western Union beat the consensus estimate for earnings in each of the trailing four quarters, with the average surprise being 15.7%, as you can see below.
Our proven model does not conclusively 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 chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate currently stands at 44 cents per share, in line with the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Western Union currently carries a Zacks Rank #3.
Now, let’s see how things have shaped up before the second-quarter earnings announcement.
Q2 Key Predictions
Lower transactions in multiple regions are expected to have affected WU’s Consumer Money Transfer (CMT) segment in the second quarter. Reduced revenues in North America, Europe and the Commonwealth of Independent States regions and the Middle East, Africa and South Asia operations are expected to have affected the results.
The Zacks Consensus Estimate indicates that CMT transactions will decline nearly 4% year over year to 67.9 million in the second quarter. This is likely to have affected the company’s top line. The consensus mark for the unit’s revenues implies a more than 9% decrease from the year-ago period’s $1.1 billion, whereas our model estimate suggests a more than 10% fall.
The consensus estimate for the CMT business’ operating income indicates a 13.4% decrease from the year-ago period, whereas our model estimate predicts a 20% fall.
The Zacks Consensus Estimate for revenues from the Consumer Services segment signals a mere 0.1% year-over-year growth. Both the consensus estimate and our model estimate for operating income from the Consumer Services unit suggest a significant decline from the year-ago period.
The above-mentioned factors are likely to have positioned the company for a year-over-year decline and made an earnings beat uncertain. However, our estimate for total operating expense implies an 8% decline from a year ago due to lower cost of service and SG&A expenses, which will provide some impetus to the margins, partially offsetting the negatives.
Price Performance
Western Union's stock has increased 4% year to date compared with the industry’s growth of 3.7%. However, the stock has underperformed the S&P 500 Index, which rallied 17% during the same period.
YTD Price Performance
Image Source: Zacks Investment Research
What Should Investors Do Now?
Given Western Union’s attractive traits of its core business, cash-generating ability and shareholder-friendly moves, investors who already have this in their portfolio may want to hold the stock for now and monitor the upcoming earnings results closely. However, growing competition, an expected decline in profits, and softening consumer spending growth present significant headwinds for the stock. New investors may want to wait on the sidelines for now and assess how the company navigates the competitive landscape.
Stocks to Consider
While an earnings beat looks uncertain for Western Union, here are some companies from the broader Business Services space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for Shift4 Payments’ bottom line for the to-be-reported quarter is pegged at 91 cents per share, which was revised upward by a penny in the past month. The estimate signals 23% year-over-year growth. The consensus estimate for FOUR’s revenues is pegged at $314 million, indicating a 37.7% increase from a year ago.
Mastercard Incorporated (MA - Free Report) has an Earnings ESP of +0.36% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Mastercard’s bottom line for the to-be-reported quarter is pegged at $3.51 per share, which signals a 21.5% year-over-year rise. The consensus estimate for MA’s revenues is pegged at $6.9 billion, a 9.3% jump from a year ago. It beat earnings estimates in each of the past four quarters, with an average surprise of 3.4%.
Bread Financial Holdings, Inc. (BFH - Free Report) has an Earnings ESP of +15.43% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Bread Financial's bottom line for the to-be-reported quarter is pegged at $1.49 per share, suggesting a 17.3% year-over-year increase. It beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 180.9%. The consensus estimate for BFH’s revenues is pegged at $918.7 million.
Image: Bigstock
Will Western Union's (WU) Q2 Profits Wire Up or Break Down?
The Western Union Company (WU - Free Report) is set to report its second-quarter 2024 results on Jul 30, after the closing bell.
The Zacks Consensus Estimate for second-quarter earnings is currently pegged at 44 cents per share, implying a decline of 13.7% from the year-ago reported number. The estimate remained stable over the past month. The Zacks Consensus Estimate for second-quarter revenues is currently pegged at almost $1.1 billion, suggesting a 9.4% fall from the year-ago actuals.
Western Union beat the consensus estimate for earnings in each of the trailing four quarters, with the average surprise being 15.7%, as you can see below.
The Western Union Company Price and EPS Surprise
The Western Union Company price-eps-surprise | The Western Union Company Quote
Q2 Earnings Whispers
Our proven model does not conclusively 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 chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate currently stands at 44 cents per share, in line with the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Western Union currently carries a Zacks Rank #3.
Now, let’s see how things have shaped up before the second-quarter earnings announcement.
Q2 Key Predictions
Lower transactions in multiple regions are expected to have affected WU’s Consumer Money Transfer (CMT) segment in the second quarter. Reduced revenues in North America, Europe and the Commonwealth of Independent States regions and the Middle East, Africa and South Asia operations are expected to have affected the results.
The Zacks Consensus Estimate indicates that CMT transactions will decline nearly 4% year over year to 67.9 million in the second quarter. This is likely to have affected the company’s top line. The consensus mark for the unit’s revenues implies a more than 9% decrease from the year-ago period’s $1.1 billion, whereas our model estimate suggests a more than 10% fall.
The consensus estimate for the CMT business’ operating income indicates a 13.4% decrease from the year-ago period, whereas our model estimate predicts a 20% fall.
The Zacks Consensus Estimate for revenues from the Consumer Services segment signals a mere 0.1% year-over-year growth. Both the consensus estimate and our model estimate for operating income from the Consumer Services unit suggest a significant decline from the year-ago period.
The above-mentioned factors are likely to have positioned the company for a year-over-year decline and made an earnings beat uncertain. However, our estimate for total operating expense implies an 8% decline from a year ago due to lower cost of service and SG&A expenses, which will provide some impetus to the margins, partially offsetting the negatives.
Price Performance
Western Union's stock has increased 4% year to date compared with the industry’s growth of 3.7%. However, the stock has underperformed the S&P 500 Index, which rallied 17% during the same period.
YTD Price Performance
Image Source: Zacks Investment Research
What Should Investors Do Now?
Given Western Union’s attractive traits of its core business, cash-generating ability and shareholder-friendly moves, investors who already have this in their portfolio may want to hold the stock for now and monitor the upcoming earnings results closely. However, growing competition, an expected decline in profits, and softening consumer spending growth present significant headwinds for the stock. New investors may want to wait on the sidelines for now and assess how the company navigates the competitive landscape.
Stocks to Consider
While an earnings beat looks uncertain for Western Union, here are some companies from the broader Business Services space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Shift4 Payments, Inc. (FOUR - Free Report) has an Earnings ESP of +0.47% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Shift4 Payments’ bottom line for the to-be-reported quarter is pegged at 91 cents per share, which was revised upward by a penny in the past month. The estimate signals 23% year-over-year growth. The consensus estimate for FOUR’s revenues is pegged at $314 million, indicating a 37.7% increase from a year ago.
Mastercard Incorporated (MA - Free Report) has an Earnings ESP of +0.36% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Mastercard’s bottom line for the to-be-reported quarter is pegged at $3.51 per share, which signals a 21.5% year-over-year rise. The consensus estimate for MA’s revenues is pegged at $6.9 billion, a 9.3% jump from a year ago. It beat earnings estimates in each of the past four quarters, with an average surprise of 3.4%.
Bread Financial Holdings, Inc. (BFH - Free Report) has an Earnings ESP of +15.43% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Bread Financial's bottom line for the to-be-reported quarter is pegged at $1.49 per share, suggesting a 17.3% year-over-year increase. It beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 180.9%. The consensus estimate for BFH’s revenues is pegged at $918.7 million.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.