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Why Should You Hold Western Union (WU) in Your Portfolio?

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Western Union Co. (WU - Free Report) remains well-poised for growth on the back of its strategic initiatives and the digitally enabled robust money transfer segment.

The stock carries an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. 

Its valuation looks attractive at the current level. The company has a forward 12-month P/S ratio of 1.59, significantly lower than the industry average of 12.69, which should attract investors.

Western Union has put in efforts to streamline its business. As part of this initiative, it sold its Speedpay and Paymap mortgage payments services businesses. These divestitures will allow Western Union to focus on its core business and also boost its capital structure by paying off debts. The company seeks to expand its digital services, thereby leveraging its platform to unlock new cross-border, cross-currency payments opportunities and generate additional operating efficiencies.

Moreover, Western Union's digitally enabled money transfer including westernunion.com and Mobile Money Transfer is the fastest-growing segment in the market. Revenues from the company’s digital platform have been increasing for the past many quarters. A significant progress in its global digital endeavors should further drive revenues for growth.

Its Business Solutions unit is also catching up, after enduring a decline for a few years, which remains encouraging. The segment witnessed revenue growth at constant currency on the back of solid contributions in the Asia-Pacific region and across Europe. It is taking additional actions to improve results going forward. 

However, Western Union’s Consumer to Consumer business has been suffering for the last few quarters. The business is persistently affected by acute competition from other fintech players that have the ability to provide services at low cost. Moreover, pricing action taken in some markets also brought revenues under pressure.

Shares of this Zacks Rank #3 (Hold) company have lost 4.5% in a year’s time against its industry’s growth of 18%.


Stocks to Consider

Investors interested in the same space may take a look at some better-ranked stocks like Cardtronics PLC , PayPal Holdings, Inc. (PYPL - Free Report) and Global Payments Inc. (GPN - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.

Cardtronics offers automated consumer financial services through its network of automated teller machines and multi-purpose financial services kiosks. The company pulled off average four-quarter positive surprise of 43.8% and sports a Zacks Rank #1 (Strong Buy). 

PayPal works as a technology platform and digital payments company. It delivered average four-quarter positive surprise of 7.6% and carries a Zacks Rank #2 (Buy).

Global Payments offers payment technology and software solutions, and came up with average four-quarter beat of 3.1%. The company holds a Zacks Rank of 2.

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