A month has gone by since the last earnings report for Western Union (WU Quick QuoteWU - Free Report) . Shares have lost about 12.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Western Union due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Western Union's Q3 Earnings Beat Estimates, Rise Y/Y

Western Union’s third-quarter 2021 earnings per share of 63 cents beat the Zacks Consensus Estimate by 8.62%. The bottom line grew 10.5% year over year.

Total revenues of $1.29 billion improved 2% year over year but missed the Zacks Consensus Estimate by 1.81%. Top-line growth was led by the digital money transfer, which continued to deliver double-digit growth, and the Business Solutions segment, partially offset by the retail money transfer due to the slow pace of economic recovery.

In its largest segment Consumer to consumer (C2C) (87% of total revenues), revenues were flat on a reported basis or declined 1% in constant currency while transactions dipped 1% during the quarter. Cross-border money transfer revenues rose 1% year over year.

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 14% at cc and represented 24% and 37% of total C2C revenues and transactions, respectively.

That the company’s mobile app is being widely used is evident from the 8% rise in its average monthly active users. Data provided by the mobile app marketing firm Sensor Tower showed that Westernunion.com was the most downloaded mobile app among its peer money transfer companies during the third quarter.

Western Union Business Solutions revenues surged 31% on a reported basis or 28% at cc. This growth came on the back of increased payment services activity and the education vertical as the business grew over the impact of COVID-19. Other revenues, which consist primarily of retail bill payments in the United States and Argentina as well as money orders, increased 3%.

Guidance Update

The company updated its financial outlook for 2021.

For 2021, management expects earnings per share to be $2.05-$2.10, higher than the prior guidance $2-$2.10. The mid-point of the revised guidance represents 11% growth from the 2020 reported figure. The company expects constant currency revenue growth of around 3-4% for 2021 compared with the prior outlook of “mid-single digit increase” (against a 3% decline in 2020). It anticipates the operating margin to remain at 21.5% for this year (compared with 20.8% in 2020).

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -9.1% due to these changes.

VGM Scores

At this time, Western Union has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Western Union has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.