Western Union (WU) third quarter profit estimates beat estimates, up Y / Y
Western Union Co.WU’s third quarter 2021 earnings per share of 63 cents were 8.62% higher than Zacks’ consensus estimate. Net income increased 10.5% year over year.
Total revenue of $ 1.29 billion rose 2% year-on-year, but missed the Zacks consensus estimate of 1.81%. Revenue growth was driven by digital money transfer, which continued to show double-digit growth, and the Business Solutions segment, partially offset by retail money transfer due to the slow economic recovery.
In its largest Consumer to Consumer (C2C) segment (87% of total revenue), revenue was flat on a reported basis or declined 1% at constant currency, while transactions declined 1% % during the quarter. Income from cross-border money transfers grew 1% year-on-year.
Western Union has invested in its digital platform to stay ahead in the rapidly evolving remittance market. Its vast electronic platform built over the years helped it during the pandemic crisis when people turned away from its physical stores to send money to their families online. During the quarter, digital money transfer revenue grew 14% at cc and accounted for 24% and 37% of total C2C revenue and transactions, respectively.
The Western Union Company Price, Consensus and EPS Surprise
The Western Union Company price-consensus-eps-surprise-chart | Western Union Company Quote
The 8% increase in the average number of monthly active users shows that the company’s mobile app is widely used. Data provided by mobile app marketing company Sensor Tower showed that Westernunion.com was the most downloaded mobile app among its money transfer companies in the third quarter.
Western Union Business Solutions revenue jumped 31% on a reported basis or 28% cc. This growth is explained by the increase in payment services business and the education vertical as the business grew under the impact of COVID-19. Other income, which consists primarily of retail bill payments in the United States and Argentina as well as money orders, increased 3%.
Update of guidelines
The company updated its financial outlook for 2021, which was previously released on August 4. GAAP and constant currency revenue forecasts have been revised to reflect recent business trends and macroeconomic conditions. In addition, the projected EPS ranges have been reduced, with adjusted EPS being revised to the higher end of the previously guided range, while GAAP EPS has been revised down slightly to reflect deferred sales taxes in Business Solutions course.
The outlook provided assumes that the macroeconomic environment in Q4 will be similar to the Q3 scenario.
Zacks rank and actions to consider
Western Union currently carries a Zacks Rank # 3 (Hold). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
Other businesses in the same space include Adyen ADYEY, Pag Seguro Digital PAG and Refund RPAY, each currently wearing a Zacks Rank # 2 (Buy).
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