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We expect money transferor Western Union Co. (WU - Analyst Report) to beat expectations when it reports fourth-quarter 2013 results on Feb 11.
Why a Likely Positive Surprise?

Our proven model shows that Western Union is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Expected Surprise Prediction or  Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +6.45%. This is very meaningful and a leading indicator of a likely positive earnings surprise for the stock.

Zacks Rank #3 (Hold): Note that stocks with Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

The combination of Western Union’s Zacks Rank #3 and +6.5% ESP makes us confident of a positive earnings beat by the company on Feb 11.

What is Driving the Better-than-Expected Earnings?

The company’s fourth-quarter earnings are expected to benefit from transaction growth due to pricing action and strong electronic channels growth in the company’s consumer-to-consumer segment. The company’s another segment – Business Solutions is expected to accrue to earnings from its expanding product offerings and increasing market penetration.

Also, Western Union’s revenues from electronic offerings such as mobile, internet, direct to bank and ATMs are expected to grow contributing to overall earnings growth. The company had performed strongly in the recent past as reflected by the trailing four-quarter positive average surprise of 12.36%.

Other Stocks to Consider

Western Union is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 3 players in the finance sector:

Walker & Dunlop, Inc. (WD - Snapshot Report), Earnings ESP of +2.7% and a Zacks Rank #2 (Buy).

Ventas, Inc. (VTR - Analyst Report), Earnings ESP of +0.94% and a Zacks Rank #2.

AllianceBernstein Holding L.P. (AB - Snapshot Report), Earnings ESP of +2.33% and a Zacks Rank #3.

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