Back to top

Image: Bigstock

Western Union (WU) Q3 Earnings: What's in the Cards?

Read MoreHide Full Article

Western Union Co. (WU - Free Report) third-quarter earnings scheduled for Nov 1, 2011, is expect to see revenue gains from growth in its Consumer-to-Consumer segment, mixed results from its Bill Pay business and softness in Business Solutions business.

Let’s See How the Segments Will Perform in Q3

Gains from Consumer-to-Consumer: The segment, which represents 80% of total company revenue should have increased on transactions grew. Geographically, constant currency revenue growth should be led by sends originated in Latin America, Europe, and North America, partially offset by declines in the Middle East and Africa. Westernunion.com C2C revenues should have increased as the company is consistently making efforts to expand its digital arm. In the second quarter, Westernunion.com was available in 45 countries and territories and represented 11% of total segment revenues.

Bill Payments Business: Revenues from this business should suffer from currency exchange movements. Pago Facil walk-in business in Argentina should have experienced transaction increases, and local currency revenue growth, but in U.S. dollar terms, this should have been largely offset by the depreciation of the Argentine peso. It’s Speedpay electronic bill payments business in the U.S. should also remain under pressure.

Underperforming Business Solutions Unit:  Revenues at this segment have been declining for three years. The trend continued in the first half of 2018 with revenues down 4% on a constant currency basis. Revenues were negatively impacted by declines in Europe, particularly in the U.K., which were partially offset by strength in North America. Though the company has undertaken turnaround initiatives in this segment, we remain on sidelines till efforts show results. We expect softness in revenues in the third quarter for the segment.

Other Factors Affecting Q3 Earnings

Gains From Growth Initiatives: Western Union undertook WU Way initiatives aimed at improving the business efficiency. It achieved approximately $28 million of incremental savings from WU Way initiatives in the first half of 2018. We expect further cost savings in the third quarter, which should aid EBIDTA.

Also high compliance expenses, investments in technology and increase in tax rates should weigh on margins.

However, share repurchases made by the company in the third quarter should provide an extra cushion to earnings.

Earnings Surprise

The company boasts an attractive earnings surprise history. It beat estimates in three out of the trailing four quarters, delivering an average positive surprise of 2.53%.

 

Here is What our Quantitative Model Predicts

Our proven model does not conclusively show that Western Union is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Western Union has an Earnings ESP of 0.00%. 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 #4 (Sell). We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies from the financial services that you may want to consider as these have the right combination of elements to beat on earnings this quarter:

You can see the complete list of today’s Zacks #1 Rank stocks here.

Cardtronics PLC has an Earnings ESP of +3.2% and a Zacks Rank #1. The company is expected to report third-quarter earnings results on Nov 1.

EVO Payments, Inc. has an Earnings ESP of +1.17% and a Zacks Rank #3. The company is expected to report third-quarter earnings results on Nov 7.

TCG BDC, Inc. (CGBD - Free Report) has an Earnings ESP of +1.65% and a Zacks Rank #2. The company is expected to report third-quarter earnings results on Nov 6.

3 Medical Stocks to Buy Now

The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.

So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.

See them today for free >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


The Western Union Company (WU) - free report >>

Carlyle Secured Lending, Inc. (CGBD) - free report >>

Published in