Financial Analysis: Western Union (WU) versus Its Competitors

Western Union (NYSE:WU) is one of 340 publicly-traded companies in the “Financial Services” industry, but how does it compare to its rivals? We will compare Western Union to related businesses based on the strength of its institutional ownership, analyst recommendations, risk, dividends, profitability, valuation and earnings.

Institutional & Insider Ownership

91.8% of Western Union shares are held by institutional investors. Comparatively, 43.2% of shares of all “Financial Services” companies are held by institutional investors. 3.3% of Western Union shares are held by insiders. Comparatively, 22.0% of shares of all “Financial Services” companies are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Western Union pays an annual dividend of $0.94 per share and has a dividend yield of 13.5%. Western Union pays out 89.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Financial Services” companies pay a dividend yield of 4.2% and pay out -91.5% of their earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current recommendations and price targets for Western Union and its rivals, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western Union	7	7	0	0	1.50
Western Union Competitors	1986	6959	11744	446	2.50

Western Union presently has a consensus price target of $6.95, indicating a potential upside of 0.14%. As a group, “Financial Services” companies have a potential downside of 8.35%. Given Western Union’s higher possible upside, equities analysts clearly believe Western Union is more favorable than its rivals.

Earnings and Valuation

This table compares Western Union and its rivals top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Western Union	$4.05 billion	$499.60 million	6.61
Western Union Competitors	$6.46 billion	$1.09 billion	9.73

Western Union’s rivals have higher revenue and earnings than Western Union. Western Union is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares Western Union and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Western Union	8.32%	49.12%	5.56%
Western Union Competitors	-338.57%	-39.92%	-5.61%

Volatility & Risk

Western Union has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Western Union’s rivals have a beta of 2.51, suggesting that their average stock price is 151% more volatile than the S&P 500.

Summary

Western Union rivals beat Western Union on 9 of the 15 factors compared.

Western Union Company Profile

Western Union is a global payments company that provides cross-border, cross-currency money transfers and other financial services. Customers can send and receive money through the company’s digital platforms and its network of agent locations, as well as use services such as bill payments where available. The company also offers payment and foreign-exchange solutions to businesses and organizations. Its services reach customers in more than 200 countries and territories, combining online and mobile options with in-person access through local agents.