Western Union's (WU, Financial) stock dropped by 3.38% in the wake of its third-quarter earnings announcement. This decline contrasts with the broader S&P 500 index, which saw a modest rise of 0.2%. The share price movement reflects investor concerns over the company’s financial results.
Despite a 6% decrease in GAAP revenue to $1.04 billion for the quarter, Western Union reported a substantial increase in net income by 55% to nearly $265 million. The adjusted earnings per share on a non-GAAP basis rose by 7% to $0.46, surpassing analyst expectations for both revenue and adjusted net income by approximately 5%.
The company's management credits the performance to the Evolve 2025 strategy, achieving consistent mid-single-digit growth over five quarters in consumer money transfer transactions. However, there was a 9% reduction in revenue from this segment compared to the previous year.
For 2024 guidance, Western Union lowered its projected revenue range to $4.13 billion - $4.20 billion from a previous $4.15 billion - $4.23 billion, while maintaining an adjusted earnings forecast of $1.70 to $1.80.
Analyzing the stock valuation, Western Union (WU, Financial) is currently priced at $11.16. The GF Value page indicates that the stock is modestly undervalued with a GF Value of $13.99. The stock presents an attractive dividend yield of 8.43%, which is close to its 10-year high, while its price-to-sales ratio of 0.96 hovers near a decade low, suggesting potential value opportunities for investors.
However, several financial health warnings persist, such as a low Altman Z-Score indicating potential distress and a declining revenue per share over the past five years. Conversely, positive indicators include an expanding operating margin and a strong Beneish M-Score that suggests the company is unlikely engaged in earnings manipulation.
Investors should weigh Western Union's (WU, Financial) attractive valuation and high yield against its financial health risks before making investment decisions. For more detailed financial insights, refer to Western Union's GF Value page.
