The Western Union Company (NYSE:WU)

I'm not confident that Western Union is willing to reduce its fees in order to grow its customer base, which seems like the best option to compete against disruptors.

- Largest global network available for money transfers. Strong brand and recognized as the Top Dog in the industry.
- Operating margins double those of its closest competitors. Translates to WU having pricing power with its customers.
- Asset light business model that requires minimal capital expenditure to maintain. Allows for Free Cash to flow directly to stockholders, in the form of share repurchases and dividends (which have doubled over the past 2 years)

Western Union is not a hot growth company that is going to knock it out of the park overnight. But with a strong network already in place globally that is hard for competitors to replicate, I believe they outperform the market over time.

WU is selling at a forward P/E of 8 and offers a 3% dividend yield.

It has a handle on money wires, serving the needs of many

It's got the market cornered in the money transfer business. I has a great balance sheet. All in all, a well run company

Why do I like WU?

Price below tangible book value: No
Most recent annual EPS positive: Yes
Pays annual dividend over 3%: Yes
Annual dividend less than 50% of annual EPS: Yes
Net profit margins, TTM and 5 yr. Avg. both over 15%: Yes
Current ratio greater than 2: No
10 years positive EPS history: Yes
5 year EPS growth: Yes
5 year dividend growth: Yes
Located in US/Canada: Yes
P/E Ratio under 10: Yes

Score: 9/11

undervalued because people who buy stocks don't tend to use this service.

lp

WU is not my favorite long term payment stock. I think others are moving into their money transfer space; but they are still eanring money and after the large drop in Fall of 2012 they are good value. But I am thinking short term.

Western Union stumbled on earnings and was punished late last fall with a 30% drop. It has recovered slightly, but we are looking at a company that will earn around $1.50 in 2014. What kind of multiple should we put on the company? How about 11x 2014 earnings due to their relatively stable cash flow generation and 3.5% current yield. My 12-18 month price target is $16.50 or 18.36% above current prices.

I transfer money and I'll use them.

Punch #6 - Q1 2013 - WU

WU's business model has come into question due to threats from new technology, but I think WU is more stable than people realize, and this firesale price offers a margin of safety in case that assumption is not as correct as i'm hoping.

WU is a CONSISTENT CASH FOUNTAIN, with very high market share, huge returns on equity, a great dividend, and the capacity for HUGE share buybacks.

Earnings yield is about 14%, and free cash flow yield is about 11%.

I'm a tad late on this one, but I think it'll still pan out just fine. Heads I win, tails I don't lose much.

Also a favorite of Todd Combs, so I wouldn't be surprised to see WU on Berkshire's next 13-F.

Not dead yet. Brand Value. Insider buying.

dividend increase of 15%, stock buy backs = consistent returns to investors. Stock is a bit beat down but the product and the company remain relevant for years to come. They offer service to underserved...good recipe.

dividend increase of 15%, stock buy backs = consistent returns to investors. Stock is a bit beat down but the product and the company remain relevant for years to come. They offer service to underserved...good recipe.

The stock got punished back in November and dropped 30% when they lowered guidance (crazy overblown reaction, considering they reported modest growth).

Since then, the tide has begun to turn in Europe and WU has significant business there (25% exposure to Europe). The stock is now very cheap.

They have 150% ROE and a 12.4% Year over Year Earnings Growth (in a bad year for Europe). Plus they have a 6.64 P/E Ratio (earnings growth is double the Price to Earnings ratio). From a technical standpoint it just closed above resistance at its 50 day moving average of $13.37. I see a 50% gain to $20 per share in a year or less. Plus you get a 3.8% dividend while you wait.

ET Screen "$, 20% 52 low"

What a great business! When you are in Central America and you see a big line outside a bank, that's relatives of workers in the US collecting their transfer. Right now they are promoting a "special". Send $50 for $5. That's 10% on every transaction!

S&P Dogs

Value play.