Western Union (WU) Gains 21% in 6 Months: More Room to Run?
Shares of The Western Union Company WU have gained 20.9% in the past six months compared with the industry’s growth of 14.9%. The Business Services sector has risen 13.2% and the S&P 500 composite index has rallied 16.5% in the same time frame. With a market capitalization of $4.8 billion, the average volume of shares traded in the last three months was 4.6 million.
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A solid digital arm, tie-ups with renowned financial services providers, an extensive global presence, cost-curbing efforts and a strong cash position continue to drive Western Union.
WU’s bottom line beat estimates in two of the trailing four quarters, matched the mark once and missed the same in the remaining one occasion, the average surprise being 14.66%.
Its return on equity, in the trailing 12-month period, is currently pegged at 116.9%, which is significantly higher than the industry’s average of 41.3%. This substantiates the company’s efficiency in utilizing shareholders’ funds.
Can WU Retain the Momentum?
Western Union, which was once a completely brick-and-mortar money transfer company, now boasts a solid digital arm. Several tie-ups with financial services providers and substantial investments pursued over the years have imparted strength to WU to build a powerful digital platform. An advanced digital banking app, WU+, continues to be rolled out across different regions of the world.
The ongoing digitization across every sphere of life, and the ease and comfort that digital remittances provide, made a perfect ground for Western Union to capitalize on. It seems well-poised to occupy a significant share in the global remittance market. For individuals preferring in-person money transfers, this Zacks Rank #3 (Hold) company has an extensive network of retail locations across 200-plus countries and territories.
Western Union also has concept stores in place as means to provide personalized, safe and seamless money transfer services in a high-traffic area. WU has undertaken several collaborations this year in a bid to expand its services reach across different countries of the world, including Mexico, Peru and Vietnam.
Additionally, the company has been pursuing several cost-cutting initiatives, which lower its expenses and drive margins. Its costs declined 2% year over year in the first half of 2023. WU also divests underperforming units in order to boost profits and operational efficiencies. The sell-off of the Business Solutions unit was one such example.
A solid cash position and adequate cash-generating abilities enable Western Union to pursue uninterrupted business investments. The financial strength also imparts WU the ability to return wealth to shareholders in the form of share buybacks and dividend payments. Its dividend yield of 7.4% remains higher than the industry’s figure of 0.7%.
Stocks to Consider
Some better-ranked stocks in the Business Services space are SPX Technologies, Inc. SPXC, FirstCash Holdings, Inc. FCFS and APi Group Corporation APG. SPX Technologies currently sports a Zacks Rank #1 (Strong Buy), and FirstCash and APi Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SPX Technologies’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 30.83%. The consensus estimate for SPXC’s 2023 earnings suggests 37.4% growth from the year-ago reported figure. The consensus mark for revenues indicates growth of 18.9% from the year-ago reported figure.
The consensus estimate for SPXC’s 2023 earnings has moved 2.7% north in the past 30 days. Shares of SPX Technologies have gained 18.5% in the past six months.
FirstCash’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 7.31%. The consensus estimate for FCFS’s 2023 earnings indicates a rise of 6.4% from the year-ago reported figure. The consensus mark for revenues suggests an improvement of 15.5% from the year-ago reported figure.
The consensus estimate for FCFS’s 2023 earnings has moved 0.9% north in the past 60 days. Shares of FirstCash have inched up 0.1% in the past six months.
APi Group’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and matched the mark once, the average surprise being 4.27%. The consensus estimate for APG’s 2023 earnings suggests 13.5% growth from the year-ago reported figure. The consensus mark for revenues indicates growth of 7.9% from the year-ago reported figure.
The Zacks Consensus Estimate for APG’s 2023 earnings has moved 0.7% north in the past 60 days. Shares of APi Group have rallied 25.2% in the past six months.
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