What happened
Shares of Western Union (NYSE: WU) were moving higher Wednesday after the money-transfer leader posted better-than-expected results in the first-quarter report it delivered after the bell Tuesday. As of 3:33 p.m. ET, the stock was up by 11%.
So what
In a difficult environment, Western Union said revenue in Q1 fell by 10%, or 1% on a constant-currency adjusted basis, to $1.04 billion. However, that topped estimates of $998.5 million.
Management said revenue fell by 3 percentage points due to its suspension of operations in Russia and Belarus, but had a 2 percentage point gain connected to inflation in Argentina. The unadjusted figure also reflects a sharp drop in revenues from its business solutions segment, which the company is in the process of selling.
Management also blamed softness in the retail money transfer business and the impact of promotional pricing activities.
On the bottom line, adjusted earnings per share fell from $0.51 to $0.43 due to a $0.09 impact from the sale of portions of the business solutions unit, as well as the lost business from Russia and Belarus. Still, that result beat analysts' consensus expectation for earnings of $0.34.
"While revenue remained below our long-term aspirations for the company, we were pleased to see a significant improvement in trajectory relative to the fourth quarter in many key markets around the world," CEO Devin McGranahan said. "We are particularly pleased with the ongoing momentum in our digital business with 14% growth in our new branded digital customer base, which accelerated global branded digital transaction growth to 7%."
Now what
Western Union expects revenue to decline by 7% to 9% year over year in the current quarter. Management also forecasts an adjusted operating margin of 19% to 21% and adjusted earnings per share of $1.55 to $1.65. That compares to the analyst consensus for a revenue decline of 8.6% and adjusted earnings per share of $1.58.
While the first-quarter report was far from stellar, Western Union stock is cheap at a price-to-earnings ratio of less than 8, and at its current share price, its dividend yields 8.7%.
In that light, the top and bottom-line beats were enough to convince investors that the stock was a good value on Wednesday.
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