The Western Union Firm WU is gaining momentum from a stable digital arm, digital ti
The Western Union Firm WU is gaining momentum from a stable digital arm, digital tie-ups and prudent capital deployment measures.
The corporate has a formidable earnings shock historical past. It has beat estimates in every of the trailing 4 quarters, the typical shock being 12.41%. Over the previous 30 days, the corporate’s 2021 earnings estimates have moved north by 2% that displays traders’ optimism.
Western Union’s trailing 12-month return on fairness (ROE) stays not solely method above 100% however can also be larger than the business’s common of 25.7%. This highlights the corporate’s tactical utilization of shareholders’ funds.
The corporate has a formidable Worth Rating of A, which displays a pretty valuation of the inventory.
What’s Driving the Inventory?
This Zacks Rank #3 (Maintain) firm has left no stone unturned in constructing a robust digital cash switch platform by making substantial investments and present process digital tie-ups. It’s price mentioning that the corporate has been pursuing digital transformation technique following a interval of fixed pressure on its revenues. A strong digital arm supplies the proper floor to the corporate to financial institution on the prevailing state of affairs since digitization appears to be the brand new lifestyle. The truth is, amid the COVID-19 pandemic, the pattern of contactless funds gained immense significance because it entails minimal bodily contact and funds might be transferred throughout borders on a real-time foundation requiring lesser time and prices.
Working example, digital cash switch revenues crossed $850 million in 2020 and improved 38% 12 months over 12 months. Administration expects digital revenues for 2021 to achieve round $1 billion. It additionally expects mid-single digit fixed forex income progress for this 12 months. Notably, the Zacks Consensus Estimate for 2021 revenues signifies year-over-year rise of 5.7%.
Furthermore, Western Union has joined forces with a number of monetary establishments worldwide in a bid to boost worldwide cash transfers. A number of the notable tie-ups undertaken by the corporate this 12 months embrace those with Triterras Inc. TRIT, Advance America and Walmart Inc. WMT. All these initiatives appear to be time opportune as the worldwide contactless fee market is anticipated to witness a CAGR of 20.6% over the 2020-2027 interval, per Allied Market Analysis.
By way of cost-curbing initiatives, Western Union stays on observe to generate roughly $100 million in annual financial savings in 2021. The corporate is well-poised to realize annual price financial savings of $150 million by 2022.
Moreover, the corporate has been dedicated to enhancing shareholder worth. Primarily based on a sturdy capital place, the corporate hiked its dividend at a eight-year CAGR of 8.2%. Throughout 2020, it deployed $587 million of capital via share buybacks and dividend funds. Notably, the corporate’s present dividend yield of three.7% stays larger than the business common of 0.5%, which makes the inventory a pretty choose for yield-seeking traders.
Shares of Western Union have gained 12.2% on a year-to-date foundation in contrast with the business’s rally of three.6%.
The Zacks Consensus Estimate for 2021 earnings per share signifies year-over-year enchancment of 10.2%. For 2021, the corporate expects earnings per share within the vary of $2.00 to $2.10, the mid-point of which represents 9.6% progress from the 2020 reported determine.
A Inventory to Think about
A greater-ranked inventory in the identical area is Diebold Nixdorf, Included DBD, which sports activities a Zacks Rank #1 (Sturdy Purchase). You may see the entire record of immediately’s Zacks #1 Rank shares right here.
Diebold Nixdorf has a trailing four-quarter earnings shock of 261.88%, on common.
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Walmart Inc. (WMT): Free Inventory Evaluation Report
The Western Union Firm (WU): Free Inventory Evaluation Report
Diebold Nixdorf, Included (DBD): Free Inventory Evaluation Report
Triterras, Inc. (TRIT): Free Inventory Evaluation Report
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.