Why Western Union Stock Wilted Today

A fresh quarterly earnings report was the news that affected Western Union's (NYSE: WU) share price on Thursday. Unfortunately, that effect was negative, as investors traded out of the stock to leave it with a more than 3% loss in price. This was on a day when the bellwether S&P 500 index grew, albeit marginally, at a 0.2% pace.

Two beats in the third quarter

Western Union's third quarter results actually crossed the wires after market hours Wednesday, and showed that the company's generally accepted accounting principles (GAAP) revenue was $1.04 billion for the period. This was down by 6% on a year-over-year basis. Under the same standard, net income flew 55% higher to just under $265 million. However, on a per-share, non-GAAP (adjusted) basis the rise was more modest, at 7% to $0.46 per share.

According to pundit estimates compiled by Zack's, Western Union's revenue notched a slight beat on the consensus, while adjusted net income exceeded the average projection by nearly 5%.

In the earnings release, management chalked up the better-than-anticipated performance to the implementation of its Evolve 2025 business strategy. This, it claims, has led to five consecutive quarters of mid-single-digit percentage growth in transactions for its critical consumer money transfer business. Yet despite that growth, the revenue produced by the unit actually decreased in the third quarter, sliding by 9% year over year.

Full-year revenue guidance trimmed

Western Union also revised its 2024 guidance. The company now expects to book revenue of nearly $4.13 billion to $4.20 billion, a downward revision from its previous anticipation of $4.15 billion to almost $4.23 billion. Adjusted earnings guidance remained unchanged at $1.70 to $1.80.

The cut in revenue guidance was probably the key reason for investor discontent on Thursday. I don't think it's necessarily anything to panic about, but compared to the performance of other companies in the current-generation payments space, Western Union isn't hitting it out of the park. It doesn't currently feel like a compelling stock.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.