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Can Western Union (WU) Q1 Earnings Pull a Surprise?

The Western Union Co.WU is scheduled to report first-quarter 2017 results on May 2, after market close.

Last quarter, Western Union surpassed the Zacks Consensus Estimate by 9.3%. Let's see how things are shaping up for this announcement.

Q1 Flashback

Results will reflect a mixed impact of same macro challenges faced last year including soft economies in oil producing countries and an uncertain geopolitical environment, as well as the negative impact of a stronger dollar.

The company expects low single-digit constant currency revenue growth with continued strong growth in westerunion.com in 2017. We expect the same to be seen in the first quarter.

In 2017, the company is emphasizing the expansion of online and mobile app offerings in two additional markets, building the account payout business, improving customer experience through initiatives such as stage-and-pay, where consumers can initiate a transaction on a mobile device and paying in cash at retail, and leveraging the EDGE digital platform to acquire more clients and gain share in Business Solutions segment. These initiatives are expected to add to the segment's top line.

Last quarter, the company commented that it will spend approximately $1 million on WU Way in 2017, and that these costs will be noted each quarter.

The costs are related primarily to the implementation, consulting and severance costs for the WU Way transformation program. A part of this cost will therefore will reflected in the quarter's results.

We also expect to see increased compliance expenditure which will be partially offset by cost savings and tight management of operating expenses. Also, interest expense will be on the higher side due to additional debt early in the year in order to fund legal settlements with Federal and State government agencies.

Share repurchases made by the company during the quarter will provide a cushion to the bottom line.

Western Union Company (The) Price and EPS Surprise

Western Union Company (The) Price and EPS Surprise | Western Union Company (The) Quote

Earnings Whispers

Our proven model does not conclusively show that Western Union is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Western Union has an Earning ESP of 0.00%. This is because the Most Accurate estimate stands at 40 cents per share, in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Western Union carries a Zacks Rank #3, which increases the predictive power of ESP. However, an Earnings ESP of 0.00% makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Prudential Financial Inc. PRU will report first-quarter 2017 earnings results on May 3. The company has an Earnings ESP of +0.38% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

The Priceline Group Inc. PCLN has an Earnings ESP of +2.05% and a Zacks Rank #3. The company is expected to report first-quarter earnings results on May 9.

Moody's Corporation MCO has an Earnings ESP of +7.38% and a Zacks Rank #2. The company is expected to report first-quarter earnings results on May 5.

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Moody's Corporation (MCO): Free Stock Analysis Report

The Priceline Group Inc. (PCLN): Free Stock Analysis Report

Prudential Financial, Inc. (PRU): Free Stock Analysis Report

Western Union Company (The) (WU): 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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