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Can Lower Transactions Affect Western Union's (WU) Q4 Earnings?
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The Western Union Company (WU - Free Report) is set to report its fourth-quarter 2023 results on Feb 6, after the closing bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for fourth-quarter earnings per share of 36 cents suggests a 12.5% increase from the prior-year figure of 32 cents. The consensus mark remained stable over the past week. However, the consensus estimate for fourth-quarter revenues of $1 billion indicates an 8% decrease from the year-ago reported figure.
Western Union beat the consensus estimate for earnings in three of the trailing four quarters and missed once, with the average surprise being 18%. This is depicted in the graph below:
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at WU’s previous-quarter performance first.
Q3 Earnings Rewind
The leading global money transfer company reported adjusted earnings of 43 cents per share for the previous quarter, beating the Zacks Consensus Estimate by 13.2%. The quarterly results were supported by the Middle East business’ strength, Evolve 2025’s momentum and transaction growth. However, the discontinuation of operations across Russia and Belarus, promotional pricing activities and higher expenses partially offset the positives.
Lower transactions in multiple regions are expected to have affected WU’s C2C Segment in the fourth quarter. Reduced revenues in North America, Europe and the Commonwealth of Independent States regions and East Asia and Oceania are expected to have affected the results, partially offset by strength in the Middle East, Africa and South Asia operations.
The Zacks Consensus Estimate indicates that C2C transactions will decline 2.5% year over year to 67.6 million in the fourth quarter. This is likely to have affected the company’s revenues. The consensus mark for the unit’s revenues implies a nearly 6% decrease from the year-ago period’s $985.2 million, whereas our estimate suggests a more than 5% fall.
The consensus estimate for revenues from the Other segment, which includes Western Union’s bill payments businesses, as well as retail money order services, signals almost a 9% year-over-year decline. The above-mentioned factors are likely to have positioned the company for a year-over-year decline and made an earnings beat uncertain.
However, our estimate for total operating expense implies a more than 11% decline from a year ago due to lower cost of service, which will provide an impetus to the margins, leading to bottom-line growth.
Both the consensus estimate and our model estimate for the C2C business’ operating income indicate a 12.2% increase from the year-ago period’s $138.6 million. Also, both the consensus estimate and our model indicate a 19.2% increase in operating income from the Other segment from the year-ago period’s $27.4 million.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Western Union this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate currently stands at 36 cents per share, in line with the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Western Union currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
While an earnings beat looks uncertain for Western Union, here are some companies from the broader Business Services space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for PagSeguro’s bottom line for the to-be-reported quarter is pegged at 29 cents per share, which suggests a 20.8% year-over-year jump. The estimate remained stable over the past week. PAGS beat earnings estimates in all the past four quarters, with an average surprise of 9%.
Fidelity National Information Services, Inc. (FIS - Free Report) has an Earnings ESP of +3.40% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Fidelity National’s bottom line for the to-be-reported quarter is pegged at 95 cents per share, which remained stable for the past week. It beat earnings thrice in the past four quarters and missed once. Furthermore, the consensus mark for FIS’ revenues is pegged at more than $2.5 billion.
S&P Global Inc. (SPGI - Free Report) has an Earnings ESP of +0.85% and a Zacks Rank of 2.
The Zacks Consensus Estimate for S&P Global’s bottom line for the to-be-reported quarter is pegged at $3.14 per share, indicating 23.6% year-over-year growth. SPGI beat earnings estimates in three of the past four quarters and met once, with an average surprise of 4%.
Image: Bigstock
Can Lower Transactions Affect Western Union's (WU) Q4 Earnings?
The Western Union Company (WU - Free Report) is set to report its fourth-quarter 2023 results on Feb 6, after the closing bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for fourth-quarter earnings per share of 36 cents suggests a 12.5% increase from the prior-year figure of 32 cents. The consensus mark remained stable over the past week. However, the consensus estimate for fourth-quarter revenues of $1 billion indicates an 8% decrease from the year-ago reported figure.
Western Union beat the consensus estimate for earnings in three of the trailing four quarters and missed once, with the average surprise being 18%. This is depicted in the graph below:
The Western Union Company Price and EPS Surprise
The Western Union Company price-eps-surprise | The Western Union Company Quote
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at WU’s previous-quarter performance first.
Q3 Earnings Rewind
The leading global money transfer company reported adjusted earnings of 43 cents per share for the previous quarter, beating the Zacks Consensus Estimate by 13.2%. The quarterly results were supported by the Middle East business’ strength, Evolve 2025’s momentum and transaction growth. However, the discontinuation of operations across Russia and Belarus, promotional pricing activities and higher expenses partially offset the positives.
Now, let’s see how things have shaped up before the fourth-quarter earnings announcement.
Q4 Factors to Note
Lower transactions in multiple regions are expected to have affected WU’s C2C Segment in the fourth quarter. Reduced revenues in North America, Europe and the Commonwealth of Independent States regions and East Asia and Oceania are expected to have affected the results, partially offset by strength in the Middle East, Africa and South Asia operations.
The Zacks Consensus Estimate indicates that C2C transactions will decline 2.5% year over year to 67.6 million in the fourth quarter. This is likely to have affected the company’s revenues. The consensus mark for the unit’s revenues implies a nearly 6% decrease from the year-ago period’s $985.2 million, whereas our estimate suggests a more than 5% fall.
The consensus estimate for revenues from the Other segment, which includes Western Union’s bill payments businesses, as well as retail money order services, signals almost a 9% year-over-year decline. The above-mentioned factors are likely to have positioned the company for a year-over-year decline and made an earnings beat uncertain.
However, our estimate for total operating expense implies a more than 11% decline from a year ago due to lower cost of service, which will provide an impetus to the margins, leading to bottom-line growth.
Both the consensus estimate and our model estimate for the C2C business’ operating income indicate a 12.2% increase from the year-ago period’s $138.6 million. Also, both the consensus estimate and our model indicate a 19.2% increase in operating income from the Other segment from the year-ago period’s $27.4 million.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Western Union this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate currently stands at 36 cents per share, in line with the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Western Union currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
While an earnings beat looks uncertain for Western Union, here are some companies from the broader Business Services space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
PagSeguro Digital Ltd. (PAGS - Free Report) has an Earnings ESP of +10.35% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PagSeguro’s bottom line for the to-be-reported quarter is pegged at 29 cents per share, which suggests a 20.8% year-over-year jump. The estimate remained stable over the past week. PAGS beat earnings estimates in all the past four quarters, with an average surprise of 9%.
Fidelity National Information Services, Inc. (FIS - Free Report) has an Earnings ESP of +3.40% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Fidelity National’s bottom line for the to-be-reported quarter is pegged at 95 cents per share, which remained stable for the past week. It beat earnings thrice in the past four quarters and missed once. Furthermore, the consensus mark for FIS’ revenues is pegged at more than $2.5 billion.
S&P Global Inc. (SPGI - Free Report) has an Earnings ESP of +0.85% and a Zacks Rank of 2.
The Zacks Consensus Estimate for S&P Global’s bottom line for the to-be-reported quarter is pegged at $3.14 per share, indicating 23.6% year-over-year growth. SPGI beat earnings estimates in three of the past four quarters and met once, with an average surprise of 4%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.