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What's in the Cards for Western Union (WU) in Q3 Earnings?

Western Union Co. WU is set to report third-quarter 2020 earnings on Oct 29, after the market closes.

In the last reported quarter, even though the company’s earnings of 41 cents per share surpassed the Zacks Consensus Estimate by 13.89%, the same declined 8.9% year over year due to COVID-19 pandemic and lost earnings from the 2019 divestitures.

Let’s see how things have been shaping up for this announcement.

In the Consumer-to-Consumer segment (which constituted nearly 83% of the company’s 2019 revenues), revenues are likely to have declined due to lower transactions and other mixed impacts. Transactions are likely to have been weighed down by weakness in the retail business, induced by reduced consumer mobility resulting from COVID-19. Shrinkage in retail transaction is expected to have been partially offset by exceptional growth in digital money transfers.

The convenient and reliable method of transferring money on smartphones or computers by the company’s digital platform might have led to digital revenue growth from westernunion.com and digital partnerships.

Another business segment Business Solutions (constituting 7% of 2019 revenues) is likely to report weak revenues due to softening trends in the verticals more exposed to COVID-19 including education, travel and tourism, and small and medium-sized enterprises.

The company’s margins are expected to have been aided by targeted productivity savings and expense management, led by the WU Way lean program and organizational efficiencies.

Q3 Earnings and Revenue Estimates

The Zacks Consensus Estimate for the company’s third-quarter earnings per share is pegged at 47 cents, indicating a decrease of 4.1% from the year-ago period’s reported figure. The consensus mark for same-period revenues stands at $1.25 billion, suggesting a 4.44% decline from the year-earlier quarter’s reported number.

Earnings Surprise History

The company’s bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters (missing the mark in one), the average beat being 3.46%.

The Western Union Company Price and EPS Surprise The Western Union Company Price and EPS Surprise

The Western Union Company price-eps-surprise | The Western Union Company Quote

What Our Quantitative Model Predicts

Our proven model predicts an earnings beat for Western Union this time around. The combination of a positive Earnings ESP   and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Western Union has an Earnings ESP of 0.00%. 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, currently.

Stocks to Consider

Some stocks worth considering from the finance sector with the apt combination of elements to surpass estimates this reporting cycle are as follows:

Visa Inc. V has an Earnings ESP of +0.30% and a Zacks Rank #3, currently.

PayPal Holdings, Inc. PYPL has an Earnings ESP of +1.14% and a Zacks Rank of 3, currently.You can see the complete list of today’s Zacks #1 Rank stocks here.

Green Dot Corporation GDOT has an Earnings ESP of +5.88% and is Zacks #3 Ranked, currently.

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The Western Union Company (WU): Free Stock Analysis Report
 
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Green Dot Corporation (GDOT): 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.

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