Why Did Western Union Stock Rise Over 4% After-Hours?

• On an adjusted basis, the remittance firm reported earnings of $0.47 per share, while analysts, on average, expected $0.43 per share.
• Western Union’s consumer services segment revenue grew 49% compared to the prior year period, driven by the expansion of its Travel Money business.
• Its consumer money transfer segment, which accounts for the lion’s share of its revenue, fell 6% year over year, amid tepid demand in North America due to U.S. immigration policies. 

Western Union’s (WU) stock gained over 4% in extended trading on Thursday after the company’s fourth-quarter earnings topped Wall Street’s estimates.

On an adjusted basis, the remittance firm reported earnings of $0.47 per share, while analysts, on average, expected $0.43 per share, according to Fiscal.ai data. Its quarterly revenue of $1.03 billion was slightly above estimates.

The company posted a net income of $139.6 million, or $0.43 per share, compared with $264.8 million, or $0.78 per share, in the year-ago quarter, when it benefited from a settlement with the U.S. Internal Revenue Service regarding the Company’s 2017 and 2018 federal income tax returns.

What Drove Western Union’s Q3 Earnings?

Western Union’s consumer services segment revenue grew 49% compared to the prior year period, driven by the expansion of its Travel Money business, which included the acquisition of Eurochange Limited, and higher revenues from its Argentina bill pay business.

In particular, the firm highlighted its Travel Money product, which accounted for half of the quarter's revenue growth. Western Union expects the business to post revenue of $150 million next year from $100 million in 2025.

“We think there's a long runway to continue to grow consumer service for the foreseeable future,” Chief Financial Officer Matthew Cagwin said in a statement.

However, the company warned that much of the surge was seasonal, and it may not be able to post similar growth rates in the fourth quarter. Its branded digital revenue increased 7% year over year, with transactions growing 12%.

What Is Retail Thinking?

Retail sentiment on Stocktwits about Western Union was in the ‘extremely bullish’ territory at the time of writing.

One user wondered if the stock could rise above $9 following earnings.

Trump’s Policies Continue To Impact Earnings

U.S. President Donald Trump’s curbs on immigration have severely impacted Western Union and its peers. Its consumer money transfer segment, which accounts for the lion’s share of its revenue, fell 6% year over year. After December, the U.S. will impose a new tax on remittances, which could further exacerbate the situation for the companies.

“U.S. immigration policies continue to disrupt our business, although the third quarter was not meaningfully different than what we saw in the second quarter,” Cagwin said during a call with analysts. However, the company said that the situation is stabilizing and it has seen growth in Europe.

Western Union shares have fallen by more than 23% this year. In August, Western Union (WU) agreed to buy a smaller remittance firm, International Money Express (IMXI), in an all-cash deal valued at $500 million to bolster its position in Latin American markets.

Also See: Why Did Gold Miner Newmont’s Stock Fall Over 5% After-Hours Today?

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