Western Union Company (NYSE: WU) provides
a range of money transfer and bill payment services worldwide. Its consumer-to-consumer operations involve multi-currency and real-time processing systems for walk-in, online, and telephone money transfers. Its consumer-to-business operations enable payments to utilities, auto finance companies, mortgage servicers, financial service providers, and governmental agencies. The firm also offers money order products and advance payment services. Western Union does business through a network of more than 335,000 locations, in over 200 countries and territories.
Investors were pleased with the company's steady results last week, when it reported Q4 EPS of 32 cents and revenues of $1.31 billion. Analysts had been looking for 31 cents and $1.3 billion. Management also guided FY08 EPS to $1.24-$1.28 ($1.26 consensus) and FY08 revenues to $5.34-$5.44 billion ($5.39B consensus). Goldman Sachs Asset Management noted that it held a 6.1 percent stake in the issue.
The share
price popped on the news and then moved into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with six "strong buys", five "buys" and ten "holds". Analysts expect a 13% growth rate, through the next year. The WU P/E ratio (19.64), Price to Free Cash Flow ratio (16.52), Operating Margin (26.98%), Net Profit Margin (17.50%), Return on Assets (15.44%) and Return on Investment (17.28%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 84% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $17.96 and $24.83. A stop-loss of $18.85 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in the stock discussed above.
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