Market Overview

Western Union Analysts Review Q1 Miss; Mizuho Calls Stock 'Value Trap'

Western Union Analysts Review Q1 Miss; Mizuho Calls Stock 'Value Trap'

Cross-border and cross-currency money movement company The Western Union Company (NYSE: WU) reported Tuesday afternoon with first-quarter results that included revenue and EPS that  fell short of expectations.

The Analysts

Mizuho Securities' Thomas McCrohan maintained a Neutral rating on Western Union with an unchanged $17 price target.

RBC Capital Market's Daniel Perlin maintained a Sector Perform rating on Western Union with an unchanged $20 price target.

Mizuho: C2C Growth Weakening 

Western Union's revenue of $1.337 billion missed expectations of $1.363 billion, while EPS of 39 cents per share missed expectations of 43 cents per share and fell 12.2 percent from last year, McCrohan said in a Wednesday note.

In addition, operating margins of 18.8 percent fell 28 basis points from a year ago due to higher acquisition and divestiture expenses.

The company's core consumer-to-consumer segment accounts for 79 percent of total revenue, and revenue growth decelerated from 1 percent in the fourth quarter to flat in the first quarter, the analyst said.

The slowdown may be due to the ongoing negative impact of last year's price reduction and the rollback of planned price increases in certain European and North American markets, McCrohan said. 

Western Union's stock looks like a "value-trap" and warrants a multiple below its peers, he said.

Mizuho's research firm's $17 price target is based on 9.2 times fiscal 2020 EPS estimates of $1.85, which is also short of the three-year average PE of 10.6 times.

RBC Says Speedpay Sale Dilutive

Western Union is expected to soon close the announced sale of its domestic bill payment business Speedpay, Perlin said in a Tuesday note.

The company sold the business — which accounted for $350 million in revenue and $90 million of EBITDA last year — for $750 million. 

The sale of Speedpay, along with the divestiture of the smaller mortgage payment solution company Paymap ($15 million in annual revenue) is expected to be dilutive by 10 cents to EPS in 2019 and 2020 after adjusting for management's plan to use the proceeds to lower debt and buyback its stock, according to Mizuho. 

Price Action

Western Union shares were trading down slightly at $19.18 late in Wednesday's session. 

Related Links:

Western Union Faces Macro Headwinds, Guggenheim Says After Q4 Print

Barclays Initiates Coverage Of Payments Sector, Names PayPal As Top Pick

Photo by Usien/Wikimedia

Latest Ratings for WU

May 2020Keefe Bruyette & WoodsMaintainsMarket Perform
May 2020CFRAReiteratesBuy
May 2020Credit SuisseMaintainsUnderperform

View More Analyst Ratings for WU
View the Latest Analyst Ratings


Related Articles (WU)

View Comments and Join the Discussion!

Posted-In: Daniel PerlinAnalyst Color Earnings News Guidance Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

RCUSSVB LeerinkReiterates42.0
ULTAWells FargoMaintains300.0
CRMWells FargoMaintains215.0
TWLOCanaccord GenuityAssumes215.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at