Tags: Western | Union | payments | WU

Western Union Profits On Global Payments

By    |   Friday, 25 Nov 2011 04:41 PM

Founded in 1851 as a telegraph company, Western Union (WU) is now a leading player in global payment systems. It shuttles money electronically through a network of 485,000 agents in 200 countries. Meanwhile, closest competitor MoneyGram (MGI) is less than half Western Union’s size.

These days, analysts especially love this Gilded Age icon. Why? Because Western Union seems to be a safe alternative to turbulent U.S. banks. The company’s main business of consumer-to-consumer payments is growing and accounted for 84 percent of 2010 revenues.

Global business payments, the other company offshoot, also is growing. Recently, Western Union gobbled up Travelex Global Business Payments, which has more than 35,000 clients. Western Union CEO Hikmet Ersek calls the niche underserved.

Spurring international expansion is Western Union’s overall strategy. The payments giant bought two leading money transfer agents in Europe this year. Western Union also expanded its ATM network. It now connects to 30,000 ATMs across Europe and Asia.

This flurry of activity is giving Western Union more steam. Third-quarter revenues spiked 6 percent to $1.4 billion versus $1.3 billion last year. Earnings beat analysts’ estimates. Attributing these solid results to loyal customers and a diversified business, Ersek raised 2011 EPS estimates.

Pleased analysts

Of the 25 analysts followed by Thomson/First Call, 10 have strong buy recommendations and eight have buys, with seven holds.

Not all analysts are as enthused, though. Citing a sluggish global macro-economy, S&P analysts have pinned a hold rating on Western Union. They note, however, the high barriers to entry in money transfer services.

The company reports next on Jan. 24.

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Founded in 1851 as a telegraph company, Western Union (WU) is now a leading player in global payment systems. It shuttles money electronically through a network of 485,000 agents in 200 countries. Meanwhile, closest competitor MoneyGram (MGI) is less than half Western Union...
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Friday, 25 Nov 2011 04:41 PM
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