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Can Western Union (WU) Earnings Pull a Surprise in Q2? - Analyst Blog

Western Union Co.WU is set to report second-quarter 2015 results after the market closes on Jul 30.

In the last quarter, this money transfer company delivered a positive earnings surprise of 2.63%. The company has been beating estimates in each of the past four quarters, the average beat being 9.75%

Will Western Union be able to keep its earnings streak alive this quarter?

Let's see what factors might have influenced the earnings report this time around.

Factors Likely to Influence Q2 Results

Western Union second-quarter results will reflect the effect of pricing investments it undertook to regain market share as well as expenses related to compliance cost.

Moreover, results might also be hurt by compressed remittance transactions and volumes which are likely to remain under pressure until global migrant employment improves.

Foreign exchange volatility will continue to affect earnings of Western Union which has a vast international business exposure.

But we believe that the company's online business (available in 24 countries), in which it is investing, heavily will bring opportunities for growth.

We also expect the company to see margin upside from restructuring efforts previously taken. But can these lead to a positive earnings surprise?

Earnings Whispers

Our proven model does not conclusively show that Western Union is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen.

However, that is not the case here as you will see below.

Zacks ESP: Western Union's Earnings ESP is 0.00%. This is because both the Most Accurate estimate of 39 cents is the same as the Zacks Consensus Estimate.

Zacks Rank: Western Union has a Zacks Rank #3 (Hold). Though a Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

Stocks to Consider

Here are some companies that have the right combination of elements to post an earnings beat this quarter:

Financial Engines, Inc. FNGN with an Earnings ESP of +6.25% and a Zacks Rank #2 (Buy)

American International Group, Inc. AIG with an Earnings ESP of +3.31% and a Zacks Rank #3

American Financial Group Inc. AFG with an Earnings ESP of +6.61% and Zacks Rank #3

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AMER INTL GRP (AIG): Free Stock Analysis Report

WESTERN UNION (WU): Free Stock Analysis Report

FINANCIAL ENGIN (FNGN): Free Stock Analysis Report

AMER FINL GROUP (AFG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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