Buyback Guru Calls on Western Union

03/17/2015 7:00 am EST


David Fried

Editor, The Buyback Letter

Our latest featured buyback recommendation is the world’s leading money transfer company, notes David Fried, editor of The Buyback Letter.

Western Union (WU)—a previous recommendation last December—has come to the top of our filters again.

Western Union has branded services Vigo, Orlandi Valuta, Pago Facil, and Western Union Business Solutions, which provide ways to send and receive money around the world, to send payments, and to purchase money orders.

These services are offered through a combined network of more than 500,000 agent locations in 200 countries and territories and over 100,000 ATMs and kiosks.

In 2014, The Western Union Company completed 255 million consumer-to-consumer transactions worldwide, moving $85 billion of principal between consumers and 484 million business payments.

WU inked a recent alliance with Bank of China to provide service throughout mainland China via the bank’s branches. This expands WU’s reach in China to the 10,000 branch locations throughout the country.

Electronic fund transfers are popular in China because of a lower transaction cost; operating out of bank branches provides an easy mode of expansion for WU.

It also began its international direct-to-bank transfers to select banks in India, paving the way for customers to send money in minutes to major Indian banks.

WU has attracted attention from many analysts and funds by generating exceptional margins and dominating the market.

Analysts praise the company for a strong brand name, vast reach in the US, excellent customer service, fast penetration, and presence within high-growth international markets.

WU posted profits of 42 cents per share for Q4, beating analysts' 34-cent average best guess. Earnings were up 35% on a year-over-year basis. The company announced a hike of 24% in its quarterly dividend.

In addition, the company approved a new $1.2 billion three-year share buyback. Overall, Western Union has reduced shares outstanding by 5.36% in the past 12 months.

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