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 345,000 locations, in over 200 countries and territories.
Investors were pleased last week, when the company guided Y08 EPS to the higher end of the range $1.25-$1.29 and revenues to the higher end of the range $5.341-$5.439 billion. Analysts had been expecting $1.28 and $5.420 billion. Management also raised its long-term EPS growth objective from 12-14% to 15-18%, reaffirmed its long-term revenue growth objective of 10-12%, and announced that the board had authorized an additional $1 billion for share repurchases.
The WU 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 eight "strong buys", two "buys" and twelve "holds". Analysts expect a 16% growth rate, through the next year. The WU Price to Free Cash Flow ratio (18.49), Operating Margin (26.35%), Net Profit Margin (17.30%), Return on Assets (15.38%) and Return on Investment (17.91%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 88% 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 $26.15. A stop-loss of $21.80 looks good here. Note that the firm is next expected to report quarterly results in late July.
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.
Twitter finally reveals revenue ambition, wants to be Google -- but not yet
Google says: Chrome for Christmas
Why is gold marching higher? Ask the central bankers
