Western Union Co. (WU - Free Report) , one of the world’s leading money remittance companies, seems poised for long-term growth on the back of its steady investment in digital platform, which has been paying off well. Numerous alliances, pacts and deal renewals have also broadened the company’s network in the United States and across the globe.
Digitally initiated money transfer, which includes westernunion.com and Mobile Money Transfer, is the fastest-growing market segment, bringing new customers and increased business to Western Union. Revenues from the company’s digital platform have been rising for the past many quarters.
Last month , Western Union announced its plan to ramp up its digital expansion internationally. The company intends to grow across more than 200 countries and territories with a complete focus on its mobile channel that helps it generate nearly 70% of its digital transactions. Also, the company tied up with Beguided, Inc., a technology company providing business solutions to increased customer service via its virtual agent offering.
The company’s digital business continued with its bull run with 22% revenue growth (or 21% at constant currency) recorded in the last reported quarter. And westernunion.com is becoming integral to the company’s business, representing 11% of total money transfer revenues in the quarter, up from 6% just three years ago.
Digital growth is a priority and Western Union expects to open multiple new westernunion.com countries this year with a focus on its mobile platform. Significant progress in its global digital initiatives should further drive revenues from this platform.
Companies like Western Union and MoneyGram International Inc. (MGI - Free Report) , which have been seasoned players in the money transfer industry, consistently ruled the space for centuries. The entities now witness a rapid shift in the way money used to be traditionally transferred. The rapid percolation of technology with its numerous advantage in the payments space such as speed, flexibility, security and ease has made digital platform the most preferred way of money remittance by customers worldwide.
This digital wave in the industry has shifted the market share from incumbent players to new ones flaunting huge technological capabilities. For instance, PayPal Holdings, Inc. (PYPL - Free Report) is a very young company in comparison to established players like Western Union and MoneyGram. However, it generates a greater share of revenue from its digital payment business than the other eminent players. Many other tech start-ups are also offering easy and cheap money transfer services, posing a significant competitive threat to Western Union.
The company has in response upended its investments in technology but still has a long way to go. Its share of revenues from the digital platform has been steadily growing and should steadily move upward, given the company’s continuous digital extension.
Year to date, the stock has dipped 0.5% against the industry’s rally of 22.8%.
Western Union carries a Zacks Rank #3 (Hold). Investors interested in the miscellaneous services industry might take a look at a better-ranked stock like Euronet Worldwide, Inc. (EEFT - Free Report) , carrying a Zacks Rank #2 (Buy).
Euronet provides payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers universally. It came up with an average four-quarter positive surprise of 0.38%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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