Western Union announces earnings tommorrow. Here are my notes: - Price has consolidated for over a year. Despite a downtrending overall market the last 6 months, its price has traded through a range. - Notable investors like Wellington, Goldman Sachs, General Electric and Fidelity all own a good amount of shares. in the billion dollar territory. - All the financial rags (Barrons and Morningstar) and even Jim Cramer have made attempts to pump the stock without success. I believe Morningstar has had quite a few articles and videos on this company. - There have been many notable press releases with Western Union signing on new deals on a weekly basis. Notable deals were with Google and several other different countries like South Africa and Poland. - The Bush administration and the courts have lightened up on the Western Union money transfer service in the United States. Before there were concerns about the service being disrupted due to litigation and regulation. - Last conference call was positive and beat analyst's estimates. Several notable analysts have made great reviews about the company and have price targets higher then the price currently. My conclusion...I have *no idea* why this stock hasnt traded much higher. Cramer pumps, financial rag pumps, analyst pumps, new deals every week, common stock being bought by notable investors, regulatory problems cleared up and great conference calls beating the analysts expectations. The conference call is tommorrow and I believe this might be a decision point for price. The price seems to have funneled itself into a tight range this last month. I know it cant stay range bound forever with especially such good fundamentals and positive analysis. Since I do own the common stock (and with my luck), the conference call will barely move the stock and it will continue to be range bound. Disclaimer: I am a long term holder of the common stock (about $15000 worth).
Thanks for the heads up Port. I think I own this pretty big I just shot an email out... I'm worried for all the reasons you just gave but the biggest being fri getting an upgrade about European / foreign transfers and the stk going down. A tel. Over the weekend I heard the obvious on the radio that money transfers between the US and Mexico are down. That's also WU's bread and butter... so where management will paint growth in far flung new markets will they suffer too much closer to home? Good post ~ stoney
Im not worried as the downtrending market action has not done much to effect WU's price. I would *like to* believe that all these institutions out there have initiated positions in the stock based upon some sort of logical reasoning. All of the name brand investors are in on this one. Between Fidelity, Wellington and Goldman there is over 3 billion dollars in investment. Why do you think General Electric has a stake in this? I havent seen GE actually in on many stocks.
Yup got it. damn. At a slight loss too. Now got to figure out what to do... hedge fund said " mexico transfers is old news... " But then said ominously " We don't own it. " How can it be old news when I heard it over the weekend on Bloomberg radio? Ah, the markets... China and India will be all management talks about hopefully for WU and they have 17% of a pretty tight market with no real cost tech outlay.... I think I'm holding but I have $35 k worth and what was a nice calm Monday has suddenly gotten a little nerve racking..... I could easily bail but the whole idea of this trade was to have financial representation in the portfolio having sold every other one... this is one I could stomach with no mortgage exposure.... still the better trade would have been to hold off and just ride the bounce on one of these other names like GS... As always I ask myself if I did dump what would I buy? There has to be a better answer-- and I'm kind of eyeing the dry bulk play EXM for a quick trade or possibly taking a LT chance with AMAG pharm or going the oil & gas route with HK.... or going with China infrastructure play JST... it's just all so confusing. None of these seem that much better than WU that's the problem...Especially so because I swore not to trade this week... Even cadiz land has news.... Arrrrg. ~ stoney
Well at quick glance you can see the stock is not cheap for a company that isn't growing at a fast pace. 19 trailing p/e and 14.5 forward p/e for a company growing at 12%. for that kind of growth you would expect a trailing p/e closer to 15 at best. then couple that with the money transfers slowing between mexico and the u.s. and you have a pretty good picture as to why this stock hasn't moved.
What about MoneyGram? MGI was competition and now they have been all but eliminated from the picture. Western Union is one of the only services where foreigners can transfer their cash to other countries. It is also one of the only services which foreigners trust as it has a reputation for fair dealings. When your making a fraction of what everyone else is making then you tend to gravitate towards what is known. The little yellow Western Union sign is universal throughout the world. If I was transfering cash from one point to the other, then I would certainly use the Western Union service. Who else could I trust? I cant imagine growth being an issue when MGI has been taken out and there is all this growth worldwide. Mexico is all but one country and there are several other outlets throughout the world for WU to grow its business. My buddy from India transfers cash all the time back to his family in India. Walk out on the street of any large city and there are lots of people from India working hard to send money back to their families. I'll have to vote with Goldman, Fidelity and Wellington on this issue who have invested 3 billion dollars of cash into this operation. There are also 648 other profesional investment funds that have bought 90% of the float on this company who have also thought along my lines of logic.
that's fine. i am just pointing out why the stock isn't moving. your mind is certainly made up so feel free to dismiss my points. i hope they have a blow out quarter for you!
what do other financials have to do with WU? explain why WU deserves a p/e near 20 if it is only growing at 12%. the general rule for p/e's is that they should be right around growth rate.
Sending money to people in other countries and around the world is Western Union's specialty. The population around the world continues to move higher with each passing day. I can send money from my computer to some random person in a third-world country easily for them to pick-up at a local merchant. There is definately growth in this segment especially with MGI out of the mix.