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Western Union (WU) to Post Q4 Earnings: What's in Store?

Zacks Equity Research

The Western Union Co. WU is slated to report fourth-quarter 2019 results on Feb 11.

The Zacks Consensus Estimate for the company’s earnings per share is pegged at 43 cents, indicating a decline of 12.24% from the year-ago quarter reported figure. The consensus mark for revenues is pegged at $1.32 billion, suggesting a decrease of 5.76% from the year-ago quarter reported figure.

Let’s see how things have shaped up for this announcement.

Western Union’s fourth-quarter revenues are likely to have been negatively impacted by strengthening of the dollar against the Argentine peso.

The bottom line is expected to have been weighed down by expenses incurred on restructuring pursuant to the previously announced ‘Global Strategy’ program.

Adjusted earnings per share are likely to have declined due to divestitures completed in the second quarter of 2019.

The company’s Consumer-to-Consumer (C2C) segment, which represents nearly 85% of total revenues, is likely to have witnessed revenue growth driven by higher cross-border sends originated in the United States and Latin America, as well as improvement in the Middle East, partially offset by declines in Asia Pacific and U.S. domestic money transfer. Digital money transfer platform is likely to have continued its growth trend of past many quarters. The company might have seen higher business generated via westernunoin.com platform, which provides services in 75 countries, plus additional territories.

Western Union Business Solutions revenues are likely to have seen just nominal growth, owing to strong performance in Europe.

Other revenues, which primarily consist of retail bill payments businesses in the United States and Argentina, are expected to have declined. The reduction can be attributed to the divestitures of the Speedpay and Paymap businesses in May and the impact of the depreciation of Argentine peso.

Company’s Guidance for 2019

The company expects growth in adjusted revenues by low single digit, adjusted operating margin of approximately 20%, adjusted EPS of $1.70 to $1.80 and adjusted cash flow from operating activities of approximately $950 million.

Earnings Surprise History

The company has an unimpressive earnings surprise history. It missed estimates in two of the trailing four quarters, beat the same once and matched it once with the negative surprise being 2.28%, on average. This is depicted in the chart below:

The Western Union Company Price and EPS Surprise

The Western Union Company Price and EPS Surprise

The Western Union Company price-eps-surprise | The Western Union Company Quote

What Our Quantitative Model Predicts

Our proven model does not predict an earnings beat for Western Union this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But this is not the case here as you can see below.

Earnings ESP: Western Union has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 43 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Western Union carries a Zacks Rank #4 (Sell).

Stocks to Consider

Some stocks from the finance sector with the apt combination of elements to surpass estimates this reporting cycle are as follows:

Moody's Corporation MCO is slated to report fourth-quarter earnings on Feb 12. It has a Zacks Rank of 2 and an Earnings ESP of +0.57%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sun Life Financial Inc. SLF is set to report fourth-quarter earnings on Feb 12. The company is Zacks #2 Ranked and has an Earnings ESP of +1.27%.

AXA Equitable Holdings, Inc. EQH is slated to announce fourth-quarter earnings on Feb 27. The stock has an Earnings ESP of +0.18% and is a #2 Ranked player.

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