We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Western Union (WU) Posts In-Line Q3 Earnings, Tweaks View
Read MoreHide Full Article
The Western Union Company (WU - Free Report) reported third-quarter 2016 operating earnings per share of 44 cents, which came in line with the Zacks Consensus Estimate. In the year-ago quarter, the company had reported earnings of 45 cents per share.
Behind The Headlines
Total revenue of $1.38 billion increased 2% year over year on a constant currency basis but decreased 2% on reported basis. It missed the Zacks Consensus Estimate of $1.40 billion.
The top line was impacted by a 3% decline in transaction fees and a 2% increase in foreign exchange revenues.
Western Union’s total expense remained unchanged year over year at $1.1 billion.
Operating margin was 20.2% in the quarter compared with 21.8% in the prior-year quarter. This was negatively impacted by $15 million Federal Trade Comission accrual (110 basis points), foreign exchange, customer and funding mix in Consumer-to-Business, and incremental technology expense, partially offset by lower compensation, and depreciation and amortization expense.
Consumer-to-Consumer, which is the main contributor to the company’s top line, reported a 1% decline in revenues to $1.1 billion due to lower transaction fees. Operating margin declined 210 basis points year over year to 23.4%, negatively impacted by $15 million FTC accrual, and foreign exchange and incremental technology expense, partially offset by lower compensation-related expenses.
In Consumer-to-Business, revenues declined 3% year over year to $155.7 million due to lower transaction fees. Operating income was $14.2 million, down 45.8% year over year. Operating margin declined 730 basis points due to the negative impact of customer and funding mix in the U.S. electronic business.
Business Solutions revenues decreased 10% year over year to $100.7 million. The segment reported operating income of $3.4 million, rebounding from the year-ago loss of $2.7 million.
Financial Update
Cash and cash equivalents as of Sep 30, 2016 were $1.28 billion, down 2.7% from the 2015-end level.
As of Sep 30, 2016, stockholders' equity was $1.39 billion, down 1.2% from year-end 2015.
Share Repurchase and Dividend Update
In the reported quarter, the company spent $84 million on share buybacks and $78 million as dividends.
2016 Guidance
For the full year, the company narrowed its revenue outlook and affirmed its EPS outlook at $1.60 to $1.70. Revenue is expected to increase approximately 1%, or 3% at constant currency. Previously, the company projected a low-to-mid single-digit constant currency increase, with GAAP revenue growth being approximately 400 basis points lower). Its guidance for cash flow from operating activities of about $1 billion remains unchanged.
Zacks Rank
Western Union currently carries a Zacks Rank #4 (Sell).
Among other financial transaction services providers, the bottom line at American Express Co. (AXP - Free Report) , MoneyGram International and MasterCard Incorporated (MA - Free Report) beat the respective Zacks Consensus Estimate for the third quarter.
Image: Bigstock
Western Union (WU) Posts In-Line Q3 Earnings, Tweaks View
The Western Union Company (WU - Free Report) reported third-quarter 2016 operating earnings per share of 44 cents, which came in line with the Zacks Consensus Estimate. In the year-ago quarter, the company had reported earnings of 45 cents per share.
Behind The Headlines
Total revenue of $1.38 billion increased 2% year over year on a constant currency basis but decreased 2% on reported basis. It missed the Zacks Consensus Estimate of $1.40 billion.
The top line was impacted by a 3% decline in transaction fees and a 2% increase in foreign exchange revenues.
Western Union’s total expense remained unchanged year over year at $1.1 billion.
Operating margin was 20.2% in the quarter compared with 21.8% in the prior-year quarter. This was negatively impacted by $15 million Federal Trade Comission accrual (110 basis points), foreign exchange, customer and funding mix in Consumer-to-Business, and incremental technology expense, partially offset by lower compensation, and depreciation and amortization expense.
Segment Update
Consumer-to-Consumer, which is the main contributor to the company’s top line, reported a 1% decline in revenues to $1.1 billion due to lower transaction fees. Operating margin declined 210 basis points year over year to 23.4%, negatively impacted by $15 million FTC accrual, and foreign exchange and incremental technology expense, partially offset by lower compensation-related expenses.
In Consumer-to-Business, revenues declined 3% year over year to $155.7 million due to lower transaction fees. Operating income was $14.2 million, down 45.8% year over year. Operating margin declined 730 basis points due to the negative impact of customer and funding mix in the U.S. electronic business.
Business Solutions revenues decreased 10% year over year to $100.7 million. The segment reported operating income of $3.4 million, rebounding from the year-ago loss of $2.7 million.
Financial Update
Cash and cash equivalents as of Sep 30, 2016 were $1.28 billion, down 2.7% from the 2015-end level.
As of Sep 30, 2016, stockholders' equity was $1.39 billion, down 1.2% from year-end 2015.
Share Repurchase and Dividend Update
In the reported quarter, the company spent $84 million on share buybacks and $78 million as dividends.
2016 Guidance
For the full year, the company narrowed its revenue outlook and affirmed its EPS outlook at $1.60 to $1.70. Revenue is expected to increase approximately 1%, or 3% at constant currency. Previously, the company projected a low-to-mid single-digit constant currency increase, with GAAP revenue growth being approximately 400 basis points lower). Its guidance for cash flow from operating activities of about $1 billion remains unchanged.
Zacks Rank
Western Union currently carries a Zacks Rank #4 (Sell).
WESTERN UNION Price, Consensus and EPS Surprise
WESTERN UNION Price, Consensus and EPS Surprise | WESTERN UNION Quote
Performance of Other Stocks
Among other financial transaction services providers, the bottom line at American Express Co. (AXP - Free Report) , MoneyGram International and MasterCard Incorporated (MA - Free Report) beat the respective Zacks Consensus Estimate for the third quarter.
Each of these companies also carries a better Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.