The Western Union Company
) reported first-quarter 2014 operating earnings of 37 cents per
share, higher than the Zacks Consensus Estimate of 35 cents but
in line with the year-ago quarter number.
Western Union's total revenue of $1.35 billion was up 2% on a
year-over-year basis, and increased 4% on a constant currency
basis. The improvement came on the back of benefits from the
previously implemented consumer money transfer pricing actions,
and the investments in Digital and in Business Solutions.
Reported revenues came in a tad higher than the Zacks Consensus
Total expenses increased 5% year over year to $1.08 billion on
account of higher cost of services as well as increased selling,
general and administrative expenses.
Reported operating margin declined 230 basis points (bps) year
over year to 20.1% due to increases in consumer-to-consumer
retail commission rates, higher compliance expenses and
consumer-to-business mix. The downside was however, partially
offset by benefits from cost savings initiatives and lower
revenues of $1.08 billion were up 3%, and 4% on constant currency
basis on the heels of pricing actions and promotions.
Transactions increased 9%. Operating margin in the segment
declined 250 bps year over year to 22.9%.
segment, revenues of $147.2 million decreased 4% year over year,
but was up 7% on constant currency basis. Operating margin in the
segment declined 450 bps year over year to 20.2%.
Revenues at Western Union
of $99.4 million scaled up 7%, or 10% on constant currency basis,
led by solid performance from Australia and Canada and improved
customers' use of hedging products. The segment's operating
margin was (3.6%), improving from (6.7%) in the year-ago quarter.
revenues, which include westernunion.com, digital and
account-based money transfer through banks, surged 36% in the
quarter and contributed 6% of the company's total revenue.
Western Union generated cash flow from operations of $196.8
billion in the first quarter. Capital expenditures were $18.2
million in the first quarter.
In the quarter, the company bought back 11 million shares for
$180 million. The company also paid $68 million in dividends.
2014 Guidance Reaffirmed
For full-year 2014, Western Union projects low-to-mid
single-digit constant currency revenue growth and earnings per
share in the range of $1.40 to $1.50.
Cash flow from operating activities in 2014 is estimated at
approximately $900 million, or $1 billion excluding anticipated
final tax payments related to agreement with the Internal Revenue
Service from 2011.
Western Union estimates its compliance-related expenses to
comprise 3.5% to 4% of revenues in 2014.
The company's operating margins in 2014 are expected to range
between 19% and 20%.
Western Union carries a Zacks Rank # 4 (Sell).
Performances of Other Financial Transaction Service
Total System Services Inc
) recently reported first-quarter 2014 operating earnings of 38
cents per share. While the bottom line was on par with the
year-ago quarter figure, it missed the Zacks Consensus Estimate
by 2 pennies.
Alliance Data Systems Corporation
) reported adjusted earnings of $2.64 per share in the first
quarter of 2014. Earnings topped the Zacks Consensus Estimate by
1.9% and were 12% above the year-ago figure.
) reported first-quarter 2014 operating earnings per share of 73
cents. The results beat the Zacks Consensus Estimate by a penny
but outpaced the year-ago quarter figure of 62 cents. The EPS is
post 10-for-1 common stock split effective Jan 21, 2014.
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WESTERN UNION (WU): Free Stock Analysis
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