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Will High Transactions Aid Western Union (WU) Q3 Earnings?

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Western Union Co. (WU - Free Report) is scheduled to report third-quarter results on Nov 2, after market close.

The company’s Consumer-to-Consumer segment is expected to witness an increase in transactions which will be driven by strong growth in westernunion.com. We expect strong transaction growth from North America and Latin American countries partly offset by declines from Europe, Middle East, Africa and South Asia regions. The Zacks Consensus Estimate for revenues from this unit is $1.1 billion, which translates into year-over-year growth of 0.3%.

Revenues from another segment Business Solutions, which facilitates payment and foreign exchange solutions, primarily cross-border, crosscurrency transactions, for small and medium size enterprises and other  organizations and individuals, is exposed to fluctuation in exchange rate between the U.S. dollar and other currencies. The Zacks Consensus Estimate for revenues from this segment is $98 million, which translates into year-over-year growth of 1%.

The company has committed to spend approximately $1 million on WU Way (its new business transformation program) in 2017, and these costs, related primarily to the implementation, consulting and severance, will be noted each quarter. Part of this cost will therefore will reflected in the quarter’s results.    

Also, the bottom line might suffer from elevated compliance spending.

Here is what our quantitative model predicts:

Our proven model shows that Western Union has the right combination of the two key ingredients to beat earnings estimates.

Zacks ESP:  Earnings ESP which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.51%. The positive ESP is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Western Union carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1, 2 or 3 have a significantly higher chance of beating on earnings.

Other Stocks to Consider

Here are some other companies that you may consider as these too have the right combination of elements to post an earnings beat this quarter:  

Intercontinental Exchange Inc. (ICE - Free Report) will report third-quarter 2017 earnings results on Nov 2. The company has an Earnings ESP of +0.19% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Prudential Financial, Inc. (PRU - Free Report) has an Earnings ESP of +0.07% and a Zacks Rank #2. The company is expected to report third-quarter earnings results on Nov1.

Lincoln National Corp. (LNC - Free Report) has an Earnings ESP of +0.05% and a Zacks Rank #2 (Buy). The company is expected to report third-quarter earnings results on Nov 1.

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