Trade-Ideas: Western Union (WU) Is Today's Post-Market Laggard Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Western Union ( WU) as a post-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Western Union as such a stock due to the following factors:

  • WU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $104.8 million.
  • WU is down 4.7% today from today's close.

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More details on WU:

The Western Union Company provides money movement and payment services worldwide. The company operates in three segments: Consumer-to-Consumer, Consumer-to-Business, and Business Solutions. The Consumer-to-Consumer segment offers cash money transfer services involving walk-in agent locations. The stock currently has a dividend yield of 3%. WU has a PE ratio of 11.5. Currently there are 7 analysts that rate Western Union a buy, 4 analysts rate it a sell, and 11 rate it a hold.

The average volume for Western Union has been 7.1 million shares per day over the past 30 days. Western Union has a market cap of $8.4 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.36 and a short float of 12.8% with 8.47 days to cover. Shares are down 8% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Western Union as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Despite the weak revenue results, WU has outperformed against the industry average of 18.2%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 45.82% is the gross profit margin for WESTERN UNION CO which we consider to be strong. Regardless of WU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 12.19% trails the industry average.
  • WESTERN UNION CO's earnings per share declined by 22.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, WESTERN UNION CO reported lower earnings of $1.43 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($1.44 versus $1.43).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the IT Services industry and the overall market, WESTERN UNION CO's return on equity significantly exceeds that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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