0R15 9025.0 0.0% 0R1E 9410.0 0.0% 0M69 None None% 0R2V 247.99 9682.643% 0QYR 1567.5 0.0% 0QYP 439.3701 -2.9016% 0RUK None None% 0RYA 1597.0 1.2682% 0RIH 195.55 0.0% 0RIH 191.4 -2.1222% 0R1O 225.5 9683.0803% 0R1O None None% 0QFP 10475.8496 107.8542% 0M2Z 252.573 0.2373% 0VSO 33.0 -7.3164% 0R1I None None% 0QZI 622.0 0.0% 0QZ0 220.0 0.0% 0NZF None None% 0YXG 222.05 -4.1318%
Company Overview
The Western Union Company (NYSE: WU) is a global leader in payment services, offering individuals and businesses globally via efficient methods to transfer money and make payments. The company services are available around more than 200 countries and also through money transfer transactions conducted and funded through websites and mobile applications marketed under the Company’s brands. WU earnings are primarily obtained from the fees that consumers pay to transfer money.
WU Details
Key Takeaways from Q2FY21 (ended June 30, 2021)
Revenues & Gross Profit Key Highlights; Analysis by Kalkine Group
Recent Developments
Other Key Findings in Q2FY21 (ended June 30, 2021)
Steady Dividends
On July 22, 2021, WU announced a quarterly cash dividend of USD 0.235 per share, which was paid on September 30, 2021, to shareholders of record on September 16, 2021. Over the last five years, the company has regularly paid dividends, as also reflected in the chart below (every D represents a dividend payment):
Consistent Dividends (Data Source: REFINITIV)
Balance Sheet & Liquidity Position
Key Metrics
In Q2FY21, WU's operating and net margins were 19.8% and 17.3%, higher than the industry median of 13.6% and 7.3%, respectively. EBITDA margin stood at 24.5% in Q2FY21 vs. the industry median of 18.0%.
Profitability Profile; Analysis by Kalkine Group
Top 10 Shareholders
The top 10 shareholders together form around 50.57% of the total shareholding, while the top 4 constitute the maximum holding. The Vanguard Group, Inc. and BlackRock Institutional Trust Co., NA hold the maximum stake in the company at 11.81% and 9.79%, respectively, as also highlighted in the chart below:
Top 10 Shareholders; Analysis by Kalkine Group
Risk Analysis
FY21 Outlook
Valuation Methodology
Price/Earnings Per Share Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation
Over the last six months, WU corrected ~18.55%. The stock is currently leaning towards the lower band of its 52-week range of USD 19.07 to USD 26.61. We have valued the stock using the Price/Earnings multiple-based illustrative relative valuation method and arrived at a target price with an upside of low twenties (in percentage terms). We believe that the company can trade at a discount compared to its peer's average, considering its significant leverage profile, business divestiture, dependence on agent network and increasing competition in the payment space. We have taken peers like MoneyGram International, Inc. (NASDAQ: MGI), Mastercard Inc. (NYSE: MA), Visa Inc. (NYSE V), among others.
Considering the robust top and bottom-line performance, strategic growth initiatives, strong profitability margins, associated risks, and current valuation, we give a "Buy" recommendation on the stock at the closing price of USD 21.29, up ~0.14% as of October 18, 2021.
WU Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.
Technical Indicators Defined
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.
Disclaimer
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