Western Union Scales 52-Week High on Strong Q4 Earnings

On Feb 25, 2015, the stock of the world’s leading money transfer company Western Union Co. (WU) touched a 52-week high of $19.67.

The rise in the stock was propelled by strong fourth-quarter 2014 earnings per share which outpaced the Zacks Consensus Estimate by 23.5%. About 4.9 million shares exchanged hands in the last session.

Growth Drivers

Western Union’s strong fourth-quarter financial performance was a continuation of superior results and attractive revenue and earnings growth. The company posted an earnings surprise in each of the past four quarters, with the average earnings beat being 10.5%.

The money transferor reported earnings per share of 42 cents, comfortably beating the Zacks Consensus Estimate of 34 cents. Earnings were also up 35% on a year-over-year basis.

The company’s better-than-expected results came on the back of a higher operating profit, a lower effective tax rate, and fewer shares outstanding as a result of share buyback.

Western Union’s top line of $1.47 billion surpassed the Zacks Consensus Estimate by 2.1% and increased 4% year over year, led by higher foreign exchange revenues.

Western Union’s results instilled confidence among investors, since its earnings growth was not skewed toward a particular segment but was broad based.

The company’s constant efforts toward cost containment, digital and mobile innovation, compliance, and cyber security assure investors of its future growth and productivity.

Investors’ optimism also stemmed from a 24% hike in the dividend of Western Union. Moreover, the company approved a new $1.2 billion three-year share repurchase authorization, reflecting its capability to generate substantial cash flow in the future.

Estimate Revision Shows Strength

Driven by optimism surrounding the stock, over the last 30 days, the Zacks Consensus Estimate for 2015 earnings per share climbed 3.2% to $1.63. For 2015, earnings estimates have gone up 2.4% to 1.68 per share.

Western Union carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Better-ranked players include Xoom Corporation (XOOM), Global Payments Inc. (GPN) and Ingenico S.A. (INGIY). All these stocks carry a Zacks Rank #2 (Buy).