The Western Union Company WU reported third-quarter 2024 adjusted earnings per share (EPS) of 46 cents, which surpassed the Zacks Consensus Estimate by 4.6%. The bottom line advanced 7% year over year.
However, total revenues declined 6% on a reported basis to $1.04 billion due to a fall in contributions from Iraq, partly offset by a well-performing Branded Digital business. Additionally, the top line beat the Zacks Consensus Estimate by 0.4%.
The quarterly results benefited from strong transaction growth in the Branded Digital business, retail foreign exchange business strength and the introduction of its media network business. A decline in overall expenses also provided some respite to margins. However, the upside was partly offset by reduced contributions from Iraq and a decline in revenues from the Consumer Services (CS) unit.
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Q3 Performance of WU
Adjusted operating margin was 19.1%, which deteriorated 50 basis points (bps) year over year due to reduced contributions from operations in Iraq and strategic investments in new and expanded CS products.
The Western Union Company Price, Consensus and EPS Surprise
The Western Union Company price-consensus-eps-surprise-chart | The Western Union Company Quote
Total expenses of $871.1 million slipped 2% year over year but were higher than our estimate of $830.3 million. The year-over-year decline was due to lower costs of services. The company incurred $18 million in redeployment costs.
Operating income fell 22% year over year to $164.9 million, which fell short of our estimate of $201.7 million.
Segment Analysis of WU
The Consumer Money Transfer, or CMT, segment recorded revenues of $932.2 million, which tumbled 9% on a reported basis and 8% on an adjusted basis. The metric also missed the Zacks Consensus Estimate of $949 million and our estimate of $943 million.
Operating income dipped 3% year over year to $188.3 million, which missed the consensus mark and our estimate of $189.1 million. The operating income margin of 20.2% improved 120 bps year over year.
Transactions within the CMT segment grew 3% year over year, attributable to 15% transaction growth in the Branded Digital business. Branded Digital revenues, which accounted for 25% of CMT’s third-quarter revenues, advanced 8% on a reported basis and 9% on an adjusted basis.
The CS segment’s revenues climbed 32% on a reported basis or 15% on an adjusted basis to $103.8 million. The metric surpassed the Zacks Consensus Estimate of $83.2 million and our estimate of $89 million. The year-over-year growth was driven by the expansion of the company’s retail foreign exchange business and its newly introduced media network business, along with the sustained strength of the retail money order business.
However, operating income dropped 58% year over year to $9.2 million in the unit, lower than the consensus mark and our estimate of $15.6 million. Operating income margin of 8.7% deteriorated 1,880 bps year over year.
WU’s Financial Position (as of Sept. 30, 2024)
Western Union exited the third quarter with cash and cash equivalents of $1.1 billion, which tumbled 13.5% from the 2023-end level.
Total assets of $7.7 billion fell 6.4% from the figure at 2023-end.
Borrowings were $2.6 billion, which increased 3.3% from the figure as of Dec. 31, 2023.
Total stockholders' equity of $652.7 million climbed 36.3% from the 2023-end figure.
WU generated net cash from operations of $272.3 million in the first nine months of 2024, which plunged 47.5% from the prior-year comparable period.
Western Union’s Capital Deployment
Western Union rewarded its shareholders with $239 million in dividends and share buybacks worth $177 million in the first nine months of 2024.
2024 Guidance of WU
Management continues to expect adjusted revenues to be between $4.150 billion and $4.225 billion.
Adjusted EPS is still anticipated to be in the range of $1.70-$1.80, the mid-point of which indicates a 0.6% improvement from the 2023 level. GAAP EPS is currently forecasted within the band of $1.94-$2.04, higher than the earlier guided range of $1.62-$1.72.
Adjusted operating margin is still expected to be between 19% and 21%. The metric was 19.6% in 2023.
WU’s Zacks Rank
Western Union currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Business Services Sector Releases
Of the Business Services sector players that have already released third-quarter results so far, the bottom-line results of ManpowerGroup Inc. MAN, Equifax Inc. EFX and Robert Half Inc. RHI beat the respective Zacks Consensus Estimate.
ManpowerGroup reported third-quarter adjusted earnings of $1.3 per share, which surpassed the Zacks Consensus Estimate by a slight margin but declined 6.5% year over year due to run-off Proservia Germany business and Argentina-related currency translation losses. Revenues of $4.5 billion surpassed the consensus mark by a slight margin but dipped 3% year over year on a reported basis and 2% on a constant-currency (cc) basis. On an organic constant currency basis, Experis tumbled 10% year over year. Talent Solutions declined 14% and the Manpower brand decreased 3% year over year.
Revenues from America of $1.1 billion tumbled 5.5% year over year on a reported basis and increased 1.5% at cc. In the United States, revenues reached $697.4 million, declining 4.5% year over year. Revenues from Southern Europe of $2.1 billion declined slightly on a reported basis and 1.3% at cc. The company registered an operating profit of $70.8 million, up 1.5% year over year on a reported basis and 4.5% at cc. Operating profit margin of 1.6% increased slightly year over year.
Equifax’s third-quarter adjusted earnings (excluding 72 cents from non-recurring items) were $1.8 per share, outpacing the Zacks Consensus Estimate by a slight margin and increasing 5.1% from the year-ago quarter’s actual. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but grew 9.3% on a year-over-year basis. Revenues in the Workforce Solutions segment totaled $620 million, growing 7% from the year-ago quarter. Within the segment, Verification Services’ revenues of $524.9 million were up 14% from the year-ago quarter’s actual. Employer Services’ revenues of $95.1 million were down 19% on a year-over-year basis.
USIS segment’s revenues were $476.9 million, which grew 12% from the year-ago quarter and outpaced our expectation of $459.4 million. Within the segment, Online Information Solutions’ revenues of $381.1 million grew 9% year over year. Mortgage Solutions’ revenues of $38 million increased 39% from the year-ago quarter. Financial Marketing Services’ revenues were $57.8 million, which gained 14% on a year-over-year basis. Adjusted EBITDA amounted to $471.9 million, up 8% on a year-over-year basis.
Robert Half reported third-quarter earnings of 64 cents per share, which beat the consensus mark by 1.6% but declined 28.9% year over year. Revenues of $1.47 billion beat the consensus mark by 1.7% but decreased 6.3% year over year. Talent Solutions’ revenues of $954 million decreased 13% year over year on an as-adjusted basis. U.S. Talent Solutions’ revenues of $725 million were down 13% year over year. Non-U.S. Talent Solutions revenues also decreased 13% year over year on an adjusted basis to $229 million.
Protiviti revenues were $511 million, which were up 5% year over year on an as-adjusted basis and surpassed our expectation of $490.2 million. The U.S. Protiviti revenues of $411 million increased 8% year over year on an adjusted basis. Non-U.S. Protiviti revenues of $90 million declined 8% year over year on an as-adjusted basis. Adjusted gross profit was $577.8 million, down 9.5% year over year. The adjusted gross profit margin of 39.4% declined 140 basis points year over year.
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The Western Union Company (WU) : Free Stock Analysis Report
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