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The Western Union Company Message Board

  • redheadinvestor@ymail.com redheadinvestor Jan 8, 2014 1:12 PM Flag

    EPS analyst forecast suspiciously low

    31 or 32 cents per share?

    The compliance cost increase will impact WU earnings by 10 to 20 cents per share per year, which is 2.5 to 5 cents per share per Q. (Source: management statements in last CC, fairly simple DD arithmetic against WU financials). The abrupt presentation of this cost increase, combined with the CFO departure, gave the whole announcement the air of something not fully anticipated or communicated internally. This suggests that management has been very conservative (self-penalizing) in its cost estimate announcement.

    Let's assume worst-case as defined by management. 32 cents plus 5 cents is 37 cents (profit before that cost is incurred) which would be a middling to lackluster Q. MRQ was 39 cents with all the pricing cuts active! But WU performance has been overall uptrending since the pricing action, indeed despite the pricing action. So analysts are predicting a breakdown in earnings PLUS the maximum end of extra compliance expense. I just don't think that level of double-whammy pessimism is justified, given recent performance.

    Profits for 2013 are likely to be about 1.50 per share. That's 37.5 cents per Q. I don't think management would have predicted flat profits for 2014 if results were going to start at 31 cents.

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WU
16.95+0.22(+1.32%)Sep 17 4:00 PMEDT

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