Western Union: Global Payment Services Stock With Over 4% Yield
Dividend Yield | Nov 04, 2012 05:04AM ET
Our weekly Dividend Idea is the global payment services stock Western Union (WU).
The money transfer company was sold-off by many investors after the disappointing the third-quarter results of the company. The company announced a 1% increase in sales and raised dividends by 25 percent and increased share buybacks to $750 million, but lowered the guidance in accordance to lower second-half revenues and a higher competition. The stock dropped around thirty percent and the current dividend yield after the dividend hike is over 4% at a P/E ratio of less than 7. Morningstar analysts estimated the fair value of the company at $25.0 which represents a potential to double.
We like the high integration and acceptation level of the company as well as the huge global diversification. Only 38% of the company's sales come from the United States, 28.31% from Europe and 27.18% from Asia. The business profile has a high degree of scale economics; Low investments are needed. Western Union generates $1.18 billion in net cash of which only $162 million were used for investments. The high free cash-flow of roughly $1.0 billion was mostly spend for dividends ($194 million) and share buybacks ($804 million). Here is a snapshot of the stock:
The Western Union Company (Western Union) is engaged in money movement and payment services. The Company’s business payments service provides consumers and businesses with options for making one-time or recurring bill payments, including business-to-business payment transactions, which are primarily cross-border, cross currency transactions. Its segments are consumer-to-consumer and global business payments. Its other businesses not included in these segments primarily consist of Western Union money order and prepaid services available through a network of third-party agents. In April 2011, the Company acquired Angelo Costa, S.r.l. In August 2011, the Company formed Western Union Ventures. In October 2011, the Company acquired Finint S.r.l. In November 2011, the Company acquired the business-to-business payment business of Travelex Holdings Limited, known as Travelex Global Business Payments. More on Reuters here.
Western Union (NYSE:WU) has a market capitalization of $7.15 billion. The company employs 8,000 people, generates revenue of $5.49 billion and has a net income of $1.17 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.58 billion. The EBITDA margin is 28.73 percent (the operating margin is 25.22 percent and the net profit margin 21.22 percent).
Financial Analysis: The total debt represents 39.51 percent of the company’s assets and the total debt in relation to the equity amounts to 400.45 percent. Due to the financial situation, a return on equity of 157.75 percent was realized. Twelve trailing months earnings per share reached a value of $2.01. Last fiscal year, the company paid $0.31 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 5.93, the P/S ratio is 1.31 and the P/B ratio is finally 8.27. The dividend yield amounts to 4.18 percent and the beta ratio has a value of 1.44.
Get The News You Want
These are the main competitors in detail:
Visa (V) has a market capitalization of $116.30 billion. The company generates revenue of $10.42 billion and has a net income of $2.14 billion. The firm’s EBITDA amounts to $2.47 billion. The EBITDA margin is 23.72% (operating margin 20.53% and net profit margin 20.55%).
The company has no long-term debt. Last fiscal year, a return on equity of 7.93% was realized. Twelve trailing months earnings per share reached a value of $1.87. Last fiscal year, the company paid $0.99 in form of dividends to shareholders.
Here are the price ratios of the company: The P/E ratio is 76.85, Price/Sales 11.16 and Price/Book ratio 4.21. Dividend Yield: 0.92%. The beta ratio is 0.77.
American Express (AXP) has a market capitalization of $63.63 billion. The company generates revenue of $32.28 billion and has a net income of $4.90 billion. The firm’s EBITDA amounts to $10.19 billion. The EBITDA margin is 31.58% (operating margin 21.55% and net profit margin 15.18%).
The total debt represents 43.10% of the company’s assets and the total debt in relation to the equity amounts to 351.63%. Last fiscal year, a return on equity of 27.64% was realized. Twelve trailing months earnings per share reached a value of $4.32. Last fiscal year, the company paid $0.72 in form of dividends to shareholders.
Here are the price ratios of the company: The P/E ratio is 13.13, Price/Sales 1.97 and Price/Book ratio 3.51. Dividend Yield: 1.41%. The beta ratio is 1.82.
eBay (EBAY) has a market capitalization of $63.00 billion. The company generates revenue of $11.65 billion and has a net income of $3.23 billion. The firm’s EBITDA amounts to $3.39 billion. The EBITDA margin is 29.12% (operating margin 21.05% and net profit margin 27.72%).
The total debt represents 7.65% of the company’s assets and the total debt in relation to the equity amounts to 11.65%. Last fiscal year, a return on equity of 19.44% was realized. Twelve trailing months earnings per share reached a value of $2.93. Last fiscal year, the company paid $0.00 in form of dividends to shareholders.
Here are the price ratios of the company: The P/E ratio is 16.61, Price/Sales 5.41 and Price/Book ratio 3.49. Dividend Yield: None%. The beta ratio is 1.47.
Mastercard (MA) has a market capitalization of $58.45 billion. The company generates revenue of $6.71 billion and has a net income of $1.90 billion. The firm’s EBITDA amounts to $2.91 billion. The EBITDA margin is 43.30% (operating margin 40.41% and net profit margin 28.36%).
The company has no long-term debt. Last fiscal year, a return on equity of 34.43% was realized. Twelve trailing months earnings per share reached a value of $17.26. Last fiscal year, the company paid $0.60 in form of dividends to shareholders.
Here are the price ratios of the company: The P/E ratio is 27.20, Price/Sales 8.34 and Price/Book ratio 10.15. Dividend Yield: 0.26%. The beta ratio is 0.90.
Fiserv (FISV) has a market capitalization of $10.21 billion. The company generates revenue of $4.34 billion and has a net income of $473.00 million. The firm’s EBITDA amounts to $1.25 billion. The EBITDA margin is 28.84% (operating margin 21.01% and net profit margin 10.91%).
The total debt represents 39.72% of the company’s assets and the total debt in relation to the equity amounts to 104.20%. Last fiscal year, a return on equity of 15.14% was realized. Twelve trailing months earnings per share reached a value of $4.24. Last fiscal year, the company paid $0.00 in form of dividends to shareholders.
Here are the price ratios of the company: The P/E ratio is 17.73, Price/Sales 2.32 and Price/Book ratio 3.24. Dividend Yield: None%. The beta ratio is 1.03.
Global Payments (GPN) has a market capitalization of $3.41 billion. The company generates revenue of $2.20 billion and has a net income of $217.57 million. The firm’s EBITDA amounts to $406.45 million. The EBITDA margin is 18.44% (operating margin 13.95% and net profit margin 9.87%).
The total debt represents 19.66% of the company’s assets and the total debt in relation to the equity amounts to 45.08%. Last fiscal year, a return on equity of 15.97% was realized. Twelve trailing months earnings per share reached a value of $2.16. Last fiscal year, the company paid $0.08 in form of dividends to shareholders.
Here are the price ratios of the company: The P/E ratio is 20.01, Price/Sales 1.55 and Price/Book ratio 2.90. Dividend Yield: 0.18%. The beta ratio is 0.85.
* I am long in WU shares. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.
For the other stocks: I have no positions in any other stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.
The stock analysis, including the rating and up/down potential, is based on historical information and provided by several data provider like Thompson Reuters, Morningstar, GoogleFinance, YahooFinance and MSN. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Material presented here is for informational purposes only. Before buying or selling a security, you should do your own research and reach your own conclusion.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.