Western Union (WU)
Western Union is up against the odds. Its sales and profitability have plummeted, suggesting it struggled to scale down its costs as demand faded.― StockStory Analyst Team
1. News
2. Summary
Why We Think Western Union Will Underperform
With a history dating back to 1851 when it began as a telegraph company, Western Union (NYSE:WU) is a global money transfer service that enables consumers and businesses to send funds across borders and currencies, typically within minutes.
- Annual sales declines of 3.4% for the past five years show its products and services struggled to connect with the market during this cycle
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- One positive is that its market-beating return on equity illustrates that management has a knack for investing in profitable ventures
Western Union’s quality is insufficient. We’re looking for better stocks elsewhere.
Why There Are Better Opportunities Than Western Union
Western Union is trading at $9.06 per share, or 5x forward P/E. Western Union’s valuation may seem like a great deal, but we think there are valid reasons why it’s so cheap.
Cheap stocks can look like great bargains at first glance, but you often get what you pay for. These mediocre businesses often have less earnings power, meaning there is more reliance on a re-rating to generate good returns - an unlikely scenario for low-quality companies.
3. Western Union (WU) Research Report: Q3 CY2025 Update
Money transfer company Western Union (NYSE:WU) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, but sales were flat year on year at $1.03 billion. The company’s full-year revenue guidance of $4.14 billion at the midpoint came in 1% above analysts’ estimates. Its non-GAAP profit of $0.47 per share was 9.5% above analysts’ consensus estimates.
Western Union (WU) Q3 CY2025 Highlights:
- Revenue: $1.03 billion vs analyst estimates of $1.02 billion (flat year on year, 1% beat)
- Pre-tax Profit: $167.6 million (16.2% margin, 23.5% year-on-year growth)
- Adjusted EPS: $0.47 vs analyst estimates of $0.43 (9.5% beat)
- Adjusted EPS guidance for the full year is $1.70 at the midpoint, roughly in line with what analysts were expecting
- Market Capitalization: $2.63 billion
Company Overview
With a history dating back to 1851 when it began as a telegraph company, Western Union (NYSE:WU) is a global money transfer service that enables consumers and businesses to send funds across borders and currencies, typically within minutes.
Western Union operates through a vast network of approximately 400,000 agent locations spanning more than 200 countries and territories. These agents include post offices, banks, retailers, and independent businesses that serve as the physical touchpoints where customers can initiate or collect money transfers. The company also offers digital services through its website and mobile applications, allowing customers to send money online using credit cards, debit cards, or bank accounts.
The company's core business revolves around cross-border remittances, where individuals send money to family members or friends in different countries. For example, a migrant worker in the United States might use Western Union to send part of their paycheck to support relatives in Mexico, with the recipient collecting cash at a local agent location by presenting identification and a transaction code.
Western Union generates revenue primarily through transaction fees and foreign exchange spreads—the difference between the exchange rate offered to customers and wholesale market rates. The company's business model relies on the global mobility of people and the resulting need to move money across borders. Beyond consumer money transfers, which account for about 90% of its revenue, Western Union offers bill payment services, money orders, and digital wallet capabilities in select markets.
The company maintains long-standing relationships with its top agents, many of whom have partnered with Western Union for over two decades. These established partnerships, combined with Western Union's brand recognition and compliance infrastructure, create a resilient global network for moving money.
4. Diversified Financial Services
Diversified financial services encompass specialized offerings outside traditional categories. These firms benefit from identifying niche market opportunities, developing tailored financial products, and often facing less direct competition. Challenges include scale limitations, regulatory classification uncertainties, and the need to continuously innovate to maintain market differentiation against larger competitors expanding their offerings.
Western Union's primary competitors include MoneyGram International, Wise (formerly TransferWise), PayPal (NASDAQ:PYPL), and Remitly (NASDAQ:RELY), along with regional players and traditional banks offering international wire transfers. The company also faces growing competition from fintech startups and digital payment platforms.
5. Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Western Union struggled to consistently generate demand over the last five years as its revenue dropped at a 3.4% annual rate. This wasn’t a great result and suggests it’s a low quality business.
Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Western Union’s annualized revenue declines of 3.4% over the last two years align with its five-year trend, suggesting its demand has consistently shrunk. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
This quarter, Western Union’s $1.03 billion of revenue was flat year on year but beat Wall Street’s estimates by 1%.
6. Pre-Tax Profit Margin
Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Diversified Financial Services companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.
The pre-tax profit margin includes interest because it's central to how financial institutions generate revenue and manage costs. Tax considerations are excluded since they represent government policy rather than operational performance, giving investors a clearer view of business fundamentals.
Over the last four years, Western Union’s pre-tax profit margin has risen by 3.7 percentage points, going from 18.9% to 15.2%. It has also declined by 3.4 percentage points on a two-year basis, showing its expenses have consistently increased at a faster rate than revenue. This usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.
In Q3, Western Union’s pre-tax profit margin was 16.2%. This result was 3.1 percentage points better than the same quarter last year.
7. Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Sadly for Western Union, its EPS and revenue declined by 1.1% and 3.4% annually over the last five years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Western Union’s low margin of safety could leave its stock price susceptible to large downswings.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Western Union, EPS didn’t budge over the last two years, but at least that was better than its five-year trend. We hope its earnings can grow in the coming years.
In Q3, Western Union reported adjusted EPS of $0.47, in line with the same quarter last year. This print beat analysts’ estimates by 9.5%. Over the next 12 months, Wall Street expects Western Union’s full-year EPS of $1.70 to grow 2.8%.
8. Return on Equity
Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.
Over the last five years, Western Union has averaged an ROE of 200%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This is a bright spot for Western Union.
9. Balance Sheet Assessment
The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.
If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.
Western Union currently has $2.59 billion of debt and $925.4 million of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 2.5×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 3.5× for a financials business.
10. Key Takeaways from Western Union’s Q3 Results
It was good to see Western Union beat analysts’ EPS expectations this quarter. We were also glad its full-year revenue guidance slightly exceeded Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 4.5% to $8.51 immediately after reporting.
11. Is Now The Time To Buy Western Union?
Updated: December 4, 2025 at 11:31 PM EST
Are you wondering whether to buy Western Union or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.
We see the value of companies driving economic growth, but in the case of Western Union, we’re out. First off, its revenue has declined over the last five years. And while its stellar ROE suggests it has been a well-run company historically, the downside is its declining EPS over the last five years makes it a less attractive asset to the public markets. On top of that, its declining pre-tax profit margin shows the business has become less efficient.
Western Union’s P/E ratio based on the next 12 months is 5.2x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now.
Wall Street analysts have a consensus one-year price target of $9.63 on the company (compared to the current share price of $8.97).