The Western Union Company Earnings: Margin Expansion Driven by Revenue Growth, Profit Rises

S&P 500 (NYSE:SPY) component The Western Union Company (WU) reported its results for the fourth quarter. Western Union is engaged in global money transfer and payment services.

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The Western Union Company Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for The Western Union Company rose to $452.3 million (73 cents per share) vs. $242.6 million (37 cents per share) in the same quarter a year earlier. This marks a rise of 86.4% from the year earlier quarter.

Revenue: Rose 5.5% to $1.43 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: The Western Union Company reported adjusted net income of 40 cents per share. By that measure, the company fell short of mean estimate of 41 cents per share. Analysts were expecting revenue of $1.44 billion.

Quoting Management: Western Union President and Chief Executive Officer Hikmet Ersek commented, “We realized many accomplishments in 2011. We exceeded our initial outlook for earnings per share, and delivered our highest full year revenue growth rate since 2008. Each of our consumer-to-consumer regions grew, with strong performance in electronic channels. Consumer bill payments continued its turnaround, and Western Union Business Solutions delivered double-digit revenue growth. We also returned $1 billion to shareholders through share repurchase and dividends.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the third quarter, net income rose 0.5% and in the second quarter, the figure rose 19.1%.

Revenue has now gone up for three straight quarters. In the third quarter, revenue rose 6.1% to $1.41 billion while the figure rose 7.3% in the second quarter from the year earlier.

The company fell short of estimates last quarter after being in line with expectations the quarter before with net income of 40 cents.

Margins rose in the third quarter after falling the quarter before. Gross margin rose 2.4 percentage points to 44.6% from the quarter earlier quarter. In the second quarter, the figure rose 0.1 percentage point to 43.3% from the year earlier quarter.

Looking Forward: Analysts have a more positive outlook about the company’s results for next quarter. The average estimate for first quarter of the next fiscal year is 41 cents per share, an increase from 39 cents sixty days ago. Over the past three months, the average estimate for the fiscal year has climbed from $1.57 per to share to $1.58.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com