Critical Analysis: Western Union Company (The) (WU) & Its Peers

Western Union Company (The) (NYSE: WU) is one of 29 publicly-traded companies in the “Transaction & Payment Services” industry, but how does it compare to its peers? We will compare Western Union Company (The) to similar businesses based on the strength of its dividends, earnings, profitability, valuation, institutional ownership, analyst recommendations and risk.

Earnings and Valuation

This table compares Western Union Company (The) and its peers revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Western Union Company (The) $5.43 billion $1.35 billion 48.85
Western Union Company (The) Competitors $1.74 billion $513.51 million 28.40

Western Union Company (The) has higher revenue and earnings than its peers. Western Union Company (The) is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Dividends

Western Union Company (The) pays an annual dividend of $0.70 per share and has a dividend yield of 3.7%. Western Union Company (The) pays out 179.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Transaction & Payment Services” companies pay a dividend yield of 1.9% and pay out 58.0% of their earnings in the form of a dividend. Western Union Company (The) has increased its dividend for 2 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Western Union Company (The) and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Western Union Company (The) 3 5 1 0 1.78
Western Union Company (The) Competitors 151 801 1084 21 2.47

Western Union Company (The) presently has a consensus target price of $20.38, suggesting a potential upside of 6.96%. As a group, “Transaction & Payment Services” companies have a potential upside of 11.08%. Given Western Union Company (The)’s peers stronger consensus rating and higher probable upside, analysts clearly believe Western Union Company (The) has less favorable growth aspects than its peers.

Institutional & Insider Ownership

56.7% of shares of all “Transaction & Payment Services” companies are owned by institutional investors. 1.1% of Western Union Company (The) shares are owned by company insiders. Comparatively, 18.1% of shares of all “Transaction & Payment Services” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Western Union Company (The) and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Western Union Company (The) 3.50% 92.41% 9.04%
Western Union Company (The) Competitors 11.92% 18.20% 5.66%

Risk and Volatility

Western Union Company (The) has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, Western Union Company (The)’s peers have a beta of 1.31, indicating that their average stock price is 31% more volatile than the S&P 500.

Summary

Western Union Company (The) peers beat Western Union Company (The) on 10 of the 15 factors compared.

About Western Union Company (The)

The Western Union Company (Western Union) is a provider of money movement and payment services. The Company operates through three segments: Consumer-to-Consumer, Consumer-to-Business and Business Solutions. The Company’s Consumer-to-Consumer segment facilitates money transfers between two consumers, primarily through a network of third-party agents. The Company’s Consumer-to-Business segment provides options to make one-time or recurring payments from consumers to businesses and other organizations, including utilities, auto finance companies, mortgage servicers, financial service providers and government agencies. Its Consumer-to-Business payments services are available through a range of services that include Speedpay, Pago Facil and Western Union Payments. Western Union’s Business Solutions segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals.

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