Tags: Western | Union | international | WU

Western Union Aims to Grow Its International Business

By    |   Monday, 06 August 2012 08:30 PM

Western Union (WU), long an established consumer brand for sending money, now aims to grow its business abroad by integrating its acquisition of Travelex Global Business Payments. Management sees growth in the international business area to come.

Western Union provides global money movement and payment services. Its consumer-to-consumer money transfer service enables people to send money around the world in minutes. As of Dec. 31, 2011, Western Union services were available through a global network of more than 485,000 agent locations in more than 200 countries and territories, with approximately 90 percent of those locations outside of the United States.

Each location in the agent network is capable of providing one or more of our services, with the majority offering a Western Union branded service. As of Dec. 31, approximately 70 percent of its locations had experienced money transfer activity in the previous 12 months.

Western Union also provides consumers and businesses with flexible and convenient options for making one-time or recurring bill payments, including business-to-business payment transactions, which are primarily cross-border, cross-currency transactions, in its global business payments segment.

In November 2011, WU acquired the business-to-business payment business of Travelex Holdings, known as Travelex Global Business Payments (TGBP). “Although the majority of the revenue in our global business payments segment was generated in the United States, international expansion and other key strategic initiatives, including TGBP, have resulted in international revenue continuing to increase in this segment,” management said in a recent filing.

Western Union has a market cap of $10.40 billion in a sector, IT services, where the average company size is $9.9 billion. Its trailing 12-month P/E ratio is 8.85 and its five-year projected price-to-earnings-growth (PEG) ratio is 0.77, compared to 1.55 for the sector.

Its projected earnings per share growth for the coming year is 8.52 percent, compared to a sector average of 12.32 percent.

Volumes to recover

Analysts are positive on WU, with buy or outperform calls from Jefferies, Raymond James, Smith Barney, and William Blair & Company.

“We expect transaction volumes to recover in many of WU's key regions, in light of a gradual improvement in the global economy,” said Standard & Poor’s analysts in late March, rating the stock a hold.

“We see WU benefiting from a relatively recent restructuring, but we expect it to invest in technology, marketing and pricing initiatives ahead of an anticipated recovery in demand.”

Western Union next reports on Oct. 23.

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Monday, 06 August 2012 08:30 PM
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