Will Western Union (WU) Q2 Earnings Snap Surprise Trend?
Zacks Investment Research | Jul 31, 2016 10:58PM ET
Western Union Co. (NYSE:WU) is set to report second-quarter 2016 earnings results after market close on Aug 3.
Last quarter, this money transfer company missed the earnings estimate by 2.63%. The company, however, beat estimates in three out of the past four reported quarters, with the average beat being 1.8%
Will Western Union be able to keep its streak of positive earnings surprise alive this quarter?
Let's see what factors might have influenced the earnings report this time around.
Factors Likely to Influence Q2 Results
A strong dollar will continue to affect second-quarter revenues of Western Union which has a broad international business exposure.
Revenues will also remain depressed due to continued weakness in Russia. Low oil prices will be affecting revenues from Middle East and Africa.
Bottom line will also see a drag from technology spending and investment that has increased from last year, as the company continues to invest in enhancements to its platforms, digital capabilities, settlement systems and data center transformation.
Higher technology expense will also negatively impact the C2C segment operating margin.
Nevertheless, the consumer-to-business and consumer-to-consumer segments will see higher operating margin from cost saving initiatives.
We also expect the company’s online business, in which it is investing heavily, to reap results. A margin upside is also likely from the restructuring efforts taken previously.
Share buybacks supported by the company’ strong balance sheet will help the bottom line. But will these be enough for an earnings beat?
Earnings Whispers
Our proven model does not conclusively show that Western Union is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Original post
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