Western Union Q4 Profits Fall 47%; Gives Weak 2013 Outlook (WU)

Western Union Q4 Profits Fall 47%; Gives Weak 2013 Outlook (WU)


Money transfer and payments firm The Western Union Company (WU) reported after the bell on Tuesday a steep drop in profits, topping analysts views, as the company invests for long-term financial health.

The Englewood, Colorado-based firm said its fourth-quarter net income fell to $237.9 million, or 40 cents per share, a 47% drop from $4452.3 million, or 73 cents per share, a year earlier. Adjusting for one-time items, the company posted a profit of 42 cents per share in the quarter.

Revenue was basically unchanged, coming in at $1.42 billion.

According to analysts polled by FactSet, Western Union was expected to earn 35 cents per share on revenue of $1.40 billion.

The decline in profits can be attributed to charges and other expenses in an on-going plan to see long term cost-savings and financial stability. The company says it will be stronger financially in 2014 and 2015, but tough times are ahead in 2013 to get to that point.

Looking ahead, Western Union expects to earn between $1.33 and $1.43 per share in 2013 with a low single digit decline in revenue. Moreover, the company plans to spend $45 million in the year to assist in reduce payroll and other expenses. Analysts are projected the company to earn $1.48 per share in the year.

“We have a solid strategy for growth. Our foundation is strong, with a valued brand, global network, and worldwide operations and expertise,” President and CEO Hikmet Ersek said.

Western Union shares were down 50 cents, or -3.49%, during pre-market trading on Wednesday. Over the past year, the stock is down about -19%.

The Bottom Line
Shares of Western Union (WU) have a dividend yield of 3.49% based on last night’s closing price of $14.34 and the company’s annualized dividend payout of 50 cents per share.

The Western Union Company (WU) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.0 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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