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Western Union's (WU) Q4 Earnings Beat Estimates, Surge Y/Y

·4 min read

Western Union Co.’s WU fourth-quarter 2021 earnings per share of 64 cents beat the Zacks Consensus Estimate of 53 cents by 20.8%. The bottom line grew 42.2% year over year. Results were driven by a non-cash charge from the termination of its pension plan.

WU witnessed a strong quarter with improvement in digital business that registered double-digit growth in the fourth quarter.

Total revenues of $1.3 billion improved 1% year over but missed the Zacks Consensus Estimate by 1%. Top-line improvement was led by the digital money transfer and the Business Solutions segment, partially offset by the retail money transfer decline.

The Western Union Company Price, Consensus and EPS Surprise

The Western Union Company Price, Consensus and EPS Surprise
The Western Union Company Price, Consensus and EPS Surprise

The Western Union Company price-consensus-eps-surprise-chart | The Western Union Company Quote

Other Quarterly Results

Total expenses of Western Union decreased 7% from the year-ago period’s level to $968 million.

In its largest segment Consumer to consumer (C2C), revenues dipped 1% on a reported basis was and were flat in constant currency while transactions were also unchanged during the quarter.

Western Union made investments in its digital platform to stay ahead in the fast-changing remittance market. Its vast electronic platform built over the years, helped it during the pandemic-borne crisis when people turned away from its brick-and-mortar stores to send money to their families online. During the quarter, digital money transfer revenues increased 12% at cc and represented 24% and 37% of total C2C revenues and transactions, respectively.

Westernunion.com revenues rose 9% year over year on a reported and constant currency basis, consisting of cross-border revenue growth of 12%.

Western Union Business Solutions revenues rose 22%, both on a reported basis and at cc. This growth came on the back of progress in international trade along with ramped-up activity in the financial institutions and the education verticals. Other revenues, comprising primarily retail bill payments in the United States and Argentina as well as money orders, increased 5% on a reported basis.

2022 Guidance

Concurrent with fourth-quarter results, management provided current-year guidance. Operating profit margin is expected in the band of 21-22%. Adjusted EPS is projected between $1.90 and $2.00. Management expects revenues for 2022 to be flat to increase low-single digit.

Capital-Deployment Update

In the fourth quarter, Western Union returned a total of $268 million to its shareholders in the form of dividends and share repurchases.

Management announced a new $1-billion 3-year share repurchase plan. Moreover, it announced a dividend of 23.5 cents in the first quarter of 2022, payable Mar 31, 2022, to its shareholders as of Mar 17, 2022.

Full-Year Update

Digital money transfer revenues for 2021 grew 22% to more than $1 billion.

Revenues for the full year increased 5% year over year (4% at cc) to $5.1 billion. The uptick was driven by solid growth in digital money transfer and the Business Solutions segment. Total C2C revenues rose 4% year over year. Business Solutions witnessed 18% revenue growth on a year-over-year basis for 2021.

EPS of WU came in at $2.19for the full year, up 17.1% from the year-ago quarter’s tally.

Zacks Rank

Western Union carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Finance Sector Releases

Of the finance sector players that have reported fourth-quarter results so far, the bottom-line results of American Express Company AXP, Synchrony Financial SYF and Discover Financial Services DFS beat the respective Zacks Consensus Estimate.

American Express' fourth-quarter results gain from record card spending.

AXP reported fourth-quarter 2021 earnings of $2.18 per share, which beat the Zacks Consensus Estimate of $1.78. Also, the bottom line increased 24% year over year. AXP’s total revenues, net of interest expense, increased 30% year over year to $12,145 million. The top line beat the Zacks Consensus Estimate of $11,597 million.

Synchrony Financial reported fourth-quarter 2021 earnings per share of $1.48, which surpassed the Zacks Consensus Estimate of $1.47 by 0.7%. The bottom line improved around 19% year over year. SYF’s results benefited from solid growth in new accounts and a higher purchase volume. However, the same was offset to some extent by steep expenses.

Discover Financial reported fourth-quarter 2021 adjusted earnings of $3.64 per share, which outpaced the Zacks Consensus Estimate of $3.61. The bottom line also improved 41% year over year.


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