WU  Western Union Company (The)

Exchange

NYSE

Sector

Miscellaneous

Industry

Business Services

Market Cap.

9.21B

Vuru Grade

62.48/100

Current Price

$19.86
+0.14 (+0.71%)

Growth Price

$11.31
Overvalued by 43.06%

Stability Price

$8.19
Overvalued by 58.75%

Company Metrics

  • P/E 51.05
  • P/S 1.68
  • P/B 13.85
  • EPS 0.39
  • Cash ROIC 43.77%
  • Cash Ratio 0.39
  • Dividend 0.7 / 3.46%
  • Avg. Vol. 3.22M
  • Shares 463.75M
  • Market Cap. 9.21B

Company Description

The Western Union Company provides money transfer and payment services worldwide. The company's Consumer-to-Consumer segment offers consumer-to-consumer money transfer services through a network of third-party agents using multi-currency and real-time money transfer processing systems. Its services include walk-in money transfer, online money transfer, telephone money transfer, account based money... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Zacks Investment Research Upgrades Western Union Company (The) (WU) to “Buy”
The Ledger Gazette - Sep 7, 2017
Western Union Company (The) logo Western Union Company (The) (NYSE:WU) was upgraded by Zacks Investment Research from a “hold” rating to a “buy” rating in a note issued to investors on Monday, November 6th.
What you need to know to get money back from the Western Union fraud settlement
Allentown Morning Call - Nov 20, 2017
Earlier this year, Western Union reached a settlement with federal authorities who alleged the money transfer service knew its network was being used for fraud and did not do enough to stop it.
Victims of Western Union fraud can file claim
Jackson Clarion Ledger - Nov 19, 2017
Back in January, Western Union agreed to pay $586 million to settle charges that the company had turned a blind eye toward scammers who had for years been using the company's worldwide wire service network to receive payments from unwitting victims.
Voice of the Consumer: Western Union admits aiding scams, reimbursing scam - Colorado Springs Gazette
Western Union Agrees To Pay Victims Of Grandma Scam $586M - CBS Local
Victims of Western Union wire transfer scams urged to file for compensation
Pittsburgh Post-Gazette - Nov 16, 2017
The fund is the result of a settlement in January between Western Union, the U.S. Justice Department and the Federal Trade Commission, which required the Englewood, Colo.
Western Union paying scam victims back - WCNC
Call for Action Alert: Western Union refunds scam victims $500 million - KKTV 11 News
Western Union Reports Third Quarter Results
Business Wire (press release) - Nov 2, 2017
“Westernunion.com money transfer delivered a 23% revenue increase in the quarter and represented 10% of our total consumer-to-consumer business.
Western Union Company (The) (WU) Price Target Increased to $17.50 by Analysts ...
The Ledger Gazette - 7 hours ago
Western Union Company (The) logo Western Union Company (The) (NYSE:WU) had its price target hoisted by Citigroup Inc. from $17.00 to $17.50 in a research note issued to investors on Friday, November 3rd.
Western Union Company (The) Forecasted to Post FY2017 Earnings of $1.84 Per ... - StockNewsTimes
Korea Investment CORP Sells 25200 Shares of Western Union Company (The) (WU) - Dispatch Tribunal
Profits Soar as Western Union CEO Cashes In on Digital Payments
Fortune - Nov 3, 2017
Western Union is benefitting from its expansion into digital payments. The company reported quarterly earnings that rose 8%, much higher than Wall Street estimates.
The Western Union (WU) Q3 2017 Results - Earnings Call Transcript - Seeking Alpha
Western Union Company (The) (WU) Dips 2.89% for November 03 - Equities.com
Did you lose money transfers to fraudsters via Western Union?
Miami Herald - Nov 14, 2017
The FTC alleged that fraudsters used Western Union to receive money from their victims even after the company was aware of the problem and had received hundreds of thousands of complaints.
Scam victims could get a refund from Western Union - WTVD-TV
Scam Victims Can Be Reimbursed By Western Union Payback - NewsChannel5.com
Mastercard Incorporated (MA) vs. The Western Union Company (WU)?: Which Should ...
Economic News - 21 hours ago
Mastercard Incorporated (NYSE:MA) and The Western Union Company (NYSE:WU) are both Financial companies that recently hit new low.
Western Union raises outlook as digital drive pays off
Financial Times - Nov 2, 2017
Western Union is reaping the benefits of its investment in digital payment, with the company raising its full-year outlook after delivering third quarter results that topped estimates.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for WU to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate WU's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$19.86 Current Price

$11.31 Growth Price (DCF)

Overvalued by 43.06%


Growth Rate Assumed by Market: 11.57%


Future Free Cash Flow Growth Rate: -4.8%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$8.19 Stability Price (EPV)

Overvalued by 58.75%


Discount Rate: 15.0%

$-206.77 Book Price

Overvalued by 1,141.14%


Excellent Cash Return on Invested Capital over the past 5 years

WU has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. Annual Reports can be useful in identifying the cause of one-time events and future sustainability.

WU has created $43.77 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 917.10M 847.30M 866.90M 804.60M 812.10M
divided by
Invested Capital 1.63B 3.00B 1.42B 2.58B 1.93B
Cash ROIC 56.15% 28.22% 61.27% 31.17% 42.04%

Excellent Return on Equity over the past 5 years

Over the past 5 years, WU has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

WU has generated $66.92 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 1.03B 798.40M 852.40M 837.80M 253.20M
divided by
Stockholders' Equity 940.60M 1.10B 1.30B 1.40B 902.20M
Return on Equity 109.07% 72.27% 65.55% 59.63% 28.06%

Excellent Business Performance over the past 10 years

WU has been able to maintain profitability in good times and bad. This could mean WU has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

WU has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 911.40M 1.20B 1.19B 959.40M 1.01B 917.10M 847.30M 866.90M 804.60M 812.10M

Weak Balance Sheet

WU's financial position is not ideal. The key is to check whether WU is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 2.19B 1.30B 1.69B 2.16B - 3.29B 2.17B 4.09B 2.48B 2.11B
Current Assets 3.13B 2.50B 4.32B 4.99B - 4.89B 5.53B 5.10B 4.62B 4.63B
Total Assets 5.78B 5.58B 7.35B 7.93B - 9.47B 10.12B 9.89B 9.46B 9.42B
Current Liabilities 2.79B 1.97B 3.41B 3.51B - 4.54B 4.95B 4.39B 4.40B 5.38B
Total Liabilities 5.73B 5.59B 7.00B 7.35B - 8.53B 9.02B 8.59B 8.05B 8.52B
Stockholder' Equity 50.70M -8.10M 353.50M 582.70M 894.80M 940.60M 1.10B 1.30B 1.40B 902.20M
Current Ratio 1.12 1.27 1.27 1.42 - 1.08 1.12 1.16 1.05 0.86
TL-to-TA 0.99 1.00 0.95 0.93 - 0.90 0.89 0.87 0.85 0.90

Consistent Reinvestment of Profits over the past 10 years

WU has consistently retained profits. This may put WU in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, WU can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 453.10M 29.20M 433.20M 591.60M 760.00M 754.70M 877.30M 968.70M 977.30M 419.30M
Retained Earnings Growth - -93.56% 1,383.56% 36.57% 28.47% -0.70% 16.24% 10.42% 0.89% -57.10%

Inconsistent Net Profit Margins over the past 10 years

WU potentially has a competitive advantage, however inconsistent profit margins are a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$13.68 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 857.30M 919.00M 848.80M 909.90M - 1.03B 798.40M 852.40M 837.80M 253.20M
divided by
Revenue 4.90B 5.28B 5.08B 5.19B 5.49B 5.66B 5.54B 5.61B 5.48B 5.42B
Net Profit Margin 17.50% 17.40% 16.70% 17.52% - 18.11% 14.41% 15.20% 15.28% 4.67%

Inconsistent Gross Profit Margins over the past 10 years

WU has good gross profit margins, however inconsistency of these margins is a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$37.80 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 2.09B 2.19B 2.21B 2.21B - 2.47B 2.31B 2.31B 2.28B 2.15B
divided by
Revenue 4.90B 5.28B 5.08B 5.19B 5.49B 5.66B 5.54B 5.61B 5.48B 5.42B
Gross Margin 42.69% 41.44% 43.45% 42.64% - 43.61% 41.63% 41.19% 41.66% 39.70%

Medium Capital Intensity over the past 10 years

WU has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

26.14% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 192.10M 53.90M 27.30M 35.00M 162.50M 268.20M 241.30M 179.00M 266.50M 229.80M
divided by
Net Income 857.30M 919.00M 848.80M 909.90M - 1.03B 798.40M 852.40M 837.80M 253.20M
Capital Expenditure Ratio 22.41% 5.87% 3.22% 3.85% - 26.14% 30.22% 21.00% 31.81% 90.76%

Very Strong Dividend History over the past 10 years

WU has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests WU is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 30.00M 28.40M 41.20M 165.30M 194.20M 254.20M 277.20M 265.20M 316.50M 312.20M
divided by
Shares Outstanding 772.90M 738.20M 701.00M 668.90M 634.20M 607.40M 559.70M 536.80M 516.70M 493.50M
Dividend Paid Per Share 0.04 0.04 0.06 0.25 0.31 0.42 0.50 0.49 0.61 0.63
Price at Year End 23.07 13.62 18.43 18.24 18.26 13.38 17.24 18.01 18.24 21.72
Dividend Yield 0.17% 0.28% 0.32% 1.35% 1.68% 3.13% 2.87% 2.74% 3.36% 2.91%

Strong History of Stock Buybacks over the past 10 years

WU has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 772.90M 738.20M 701.00M 668.90M 634.20M 607.40M 559.70M 536.80M 516.70M 493.50M
Stock Bought Back - 4.70% 5.31% 4.80% 5.47% 4.41% 8.52% 4.27% 3.89% 4.70%
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