Western Union Exceeds Q3 Earnings Expectations

Global payment services provider Western Union (WU) reported stronger-than-expected Q3 results, exceeding both earnings and revenue estimates. However, shares dropped 2.1% during the extended trading session on November 2.

Notably, adjusted earnings of $0.63 per share beat analysts’ expectations of $0.57 per share. The company had reported earnings of $0.57 per share in the same quarter last year.

Similarly, revenues grew 2% year-over-year to $1.3 billion and exceeded consensus estimates of $1.32 billion. The increase in revenues reflects a surge in Digital Money Transfer revenues, which increased 15% to $266 million, coupled with a 31% growth in the Business Solutions segment.

Furthermore, adjusted operating margin improved to 25.2%, against 23.5% in the same quarter last year. (See Western Union stock chart on TipRanks)

Based on robust Q3 results and current business trends, WU updated its financial guidance for FY 2021. The company now forecasts adjusted earnings in the range of $2.05-$2.10 per share, while the consensus estimate is pegged at $2.07 per share.

Western Union CEO, Hikmet Ersek, commented, “I am also excited to announce the continued progress of our ecosystem strategy, with the upcoming digital banking pilot in Germany and Romania, which is on track to launch by year-end.”

He added, “Additionally, in select countries, we recently launched WU Shop, a shopping and cash back rewards program, initially targeting Western Union MyWU loyalty members.”

Following the earnings results, JMP Securities analyst David Scharf maintained a Hold rating on Western Union.

Overall, the stock has a Hold consensus rating based on 1 Buy, 5 Holds, and 2 Sells. The average Western Union price target of $24.67 implies 35.03% upside potential. However, shares have dropped 11% over the past year.

According to TipRanks’ Smart Score rating system, Western Union scores a 5 out of 10, suggesting that the stock is likely to perform in line with market averages.

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