Western Union (WU, Financial) saw a 5% stock increase following a $1 billion share repurchase authorization, breaking out of a month-long consolidation. Despite a 50% decline since 2021 highs and a 6% drop in 2024, competition in the money-transfer sector has been a significant challenge, hindering year-over-year revenue growth.
Signs of a potential turnaround have emerged, suggesting a meaningful rebound in 2025.
- In Q3, WU's Consumer Money Transfer segment, which accounts for 92% of FY23 revenues, achieved its fifth consecutive quarter of mid-single-digit adjusted revenue growth. This reflects the success of the Evolve 2025 strategy aimed at regaining market competitiveness through customer and agent enhancements. Since 2023, WU has regained market share, capturing a low-teens percentage of the money transfer market.
- WU's Branded Digital and Consumer Services segments also showed strong performance, with sales increasing by 9% and 15% year-over-year, respectively, on an adjusted basis. Although these segments are smaller, their positive trends bolster confidence in a return to profitable revenue growth.
- External factors have aided WU's turnaround. The rising global cost of transferring funds has led to price hikes by competitors, causing smaller players to exit the industry. WU's extensive global presence in 200 countries and territories has helped it manage disruptions, including increased capital costs.
WU's $1 billion repurchase authorization, representing 26% of its market cap, reflects management's confidence in future cash flows and suggests that they view the stock as undervalued. With positive momentum from a promising Q3 report, WU may experience a significant bounce in the coming year.
