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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
The Western Union Company (XNYS:WU) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
WU
Name:
THE WESTERN UNION COMPANY (XNYS:WU)
Sector:
170.20M
Industry:
Credit Services
CEO:
Mr. Hikmet Ersek
Total Employees:
10,500
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 188.57% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF THE WESTERN UNION COMPANY(WU) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND CREDIT SERVICES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
14.56
One Month Price Target:
$14.64
Six Month Price Target :
$15.01
Likely Price in One Year's Time:
Ticker:
$15.47
Likely Trading Range Today Under (Normal Volatility)
$14.5
Price Upper limit ($) :
$14.6
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$13.9
This week:
$13.08
This month :
$11.59
Other Primary facts
Market Cap:
5.55B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
385.75M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
11.3%
-12.57%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$17.64
$16.26
$11.48
$12.86
Medium risk (<10%) entry points
Buy Call
Sell Call
$15.81
Buy Put:
Sell Put:
$15.52
$13.30
$13.60
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
WU
Sharpe Ratio:
-3.32%
Comparison:
WU, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -278.36% lower than the industry
& is -245.47% lower than the market/S&P 500 average
Average Returns/Yield of
WU
Daily returns:
-0.06%
Weekly returns:
-0.32%
Monthly returns:
-1.27%
Yearly returns:
19.06%
Comparison of returns:
Average annual returns/yield (last 3 years) is -180.15% below industry average
Classification:
WU, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.23
Statistical test of Returns:
WU has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.19%
Weekly Volatility:
4.89%
Monthly Volatility:
9.78%
Yearly Volatility:
33.88%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.10%
Volatility in last five trading days has been -49.48% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.55%
Weekly VaR:
-10.18%
Monthly VaR:
-20.37%
How Much Can the price of
WU
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-19%
Worst case (decline):
-70.56%
This translates to price declining to:
$11.83
This translates to price declining to:
$4.29
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
WU is a 43.77% riskier investment compared to the market/S&P 500 & is 23.16% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -33.73% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
WU
Beta in relation to market/S&P 500--0.93
Expected beta in 1 year's time:
0.79
Expected beta in 3 year's time:
1.117
Unlevered (debt free) Beta:
0.137
Beta in relation to Nasdaq (XNAS):
0.557
Beta in relation to all global stocks::
0.534
Beta Comparison & Analysis
Beta of competitors/peers::
1.005
Beta is -7.64% lower than peers
Average Industry Beta:
1.332
Beta is -30.31% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
137.73%
Sustainable growth rate is 308.23% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.248
Alpha is -465.15% below industry average alpha yield
Alpha is -1578% below the market average
Analysis of Cost of Capital of
WU
Equity cost of capital:
0.095
Equity cost of capital is -22.53% below industry mean WACC
Unlevered (without debt) cost of capital:
1.40%
Before-tax cost of debt:
4.02%
After-tax cost of debt:
3.18%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.18%
WACC is -6.22% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$13.00
Revenue growth rate per share of (3Y):
15.92
Annual revenue growth rate is -100.36% below industry average
EPS:
$2.27
Expected Annual growth rate of EPS (3Y):
-7.26%
Expected future EPS growth rate is -128.98% lower than the Credit Services industry
Free cash flow (FCF) per share:
$2.26
Balance sheet equity growth per share: 22.38%
Equity growth rate per share is -6.01% lower than the industry
Debt per share
$6.31
EBITDA per share
$3.62
Valuation Analysis Today of
WU
P/E Ratio:
6.52
P/E Ratio of Competitors/Peers:
9.52
P/E ratio is -31.54% lower than main peers & is -46.32% lower than the industry
Stock price/value with industry average P/E ratio: $27.55
WU is -47.15% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $27.92
Present value of the expected future dividends only: $12.22
P/S (Price to Sales ratio):
1.12
Price to sales ratio is -78.46% below the industry mean
P/B (Price to book value ratio):
15.92
Price to free cash flow: 6.45
-
Net income growth rate (3Y):
3.65%
Net income growth rate is -77.40% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 10.01%
Dividend yeild: 6.46%
Previous Dividend: $0.24
Previous adjusted dividend: $0.24
Previous Dividend: $0.94
Expected next dividend best case: $0.24
Expected next dividend worst case: $0.23
Average dividend payment (long-term): $0.23
Average dividend increase/decrease (growth rate) % per period: 1.69%
Expected next dividend payment date: 28/09/2022
Expected next dividend record date: 14/09/2022
-
Previous dividend payment date: 30/06/2022
Previous dividend record date: 16/06/2022
-
Dividend History:
2022-06-15--$0.24
2021-12-16--$0.24
2021-06-15--$0.24
2022-03-16--$0.24
2021-09-15--$0.24
2021-03-16--$0.24
Dividend growth rate is -117.66% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
690.05%
Net debt to equity ratio:
351.11%
Debt to assets ratio:
28.68%
Net debt to assets ratio:
14.59%
Debt-to-asset ratio is -63.21% below industry average
Ability to repay debt:
Interest coverage ratio:
13.72
Interest coverage ratio is 39.68% more than industry average
Looking forward:
Debt growth rate:
-8.89%
Annual debt growth is -118% lower than industry average debt growth rate
Debt repayment rate in last quarter: 16.33%
Analysis of Key Statistics
Correlation of price movement with the market:
0.584
Statistical significance of correlation:
WU has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.561
Stock price is 4.12% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.561
Correlation of price movement with Nasdaq (^IXIC):
0.015
Covariance of price movement with the market:
0.019
Kurtosis
4.512
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.099
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
WU
Gross Profit Margin Ratio:
173%
Operating Profit Margin Ratio:
22.48%
Operating profit margin is -22.68% lower than the industry
Net Profit Margin Ratio:
173%
Effective Tax Rate:
16.21%
Effective tax rate is -25.16% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
260.01%
Return on equity (ROE) is 513.28% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
10.81%
Return on assets (ROA) is 78.34% higher than the industry
Financial Leverage:
1.4x
Current Ratio:
1.28
Current ratio is -77.83% below industry average
Cash Conversion Cycle (days):
-56.7
Cash conversion cycle is -142.75% below industry average
The remaining useful life of property plant & equipment is: 10.6 years
Stock based compensation to net income ratio:
-
In-depth Efficiency Analysis
Revenue generated per employee:
477.8K
Each employee generates -34% less revenue than industry average revenue per employee
EBITDA generated per employee:
133.2K
Each employee generates -68% less EBITDA than industry average revenue per employee
Profit generated per employee:
87.4K
Each employee generates -64% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
16.2K
Each employee generates -72% less free cash flow than industry average revenue per employee
Assets/Capital per employee
625.7K
Each employee generates -72% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
WU
RENAISSANCERE HOLDINGS LTD. (XNYS:RNR)
SYNOVUS FINANCIAL CORP. (XNYS:SNV)
HOULIHAN LOKEY, INC. (XNYS:HLI)
REINSURANCE GROUP OF AMERICA, INCORPORATED (XNYS:RGA)
STIFEL FINANCIAL CORP. (XNYS:SF)
Bancolombia SA (XNYS:CIB)
JANUS HENDERSON GROUP PLC (XNYS:JHG)
RENAISSANCERE HOLDINGS LTD. (XNYS:RNR)
VOYA FINANCIAL, INC. (XNYS:VOYA)
Current Analyst Ratings
Strong buy�17%
Buy�0%
Hold�42%
Sell�29%
Strong sell�4%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
5.02B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
2.85B
2.17B
-
-
1.04B
-
-
1.04B
1.60M
101.90M
201.60M
1.40B
1.13B
917.30M
1.09B
177.40M
917.30M
Statement of Cash Flow
Date:
Period:
46.80M
Differed Income Tax :
-
Stock Based Compensation :
-
Change in Working Capital :
- 7200.00K
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
- 132900.00K
Net Cash Provided by Operating Activities:
200.00M
Investments in PP&E:
- 10300.00K
Net Acquisitions:
896.10M
Purchases of Investments:
- 428400.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
1.30B
-
1.30B
-
-
623.10M
1.92B
122.90M
2.03B
400.10M
-
-
4.01B
6.57B
-
8.49B
470.70M
100.00M
927.30M
-
927.30M
1.50B
2.43B
4.02B
6.64B
-
8.14B
3.90M
- 495400.00K
- 116200.0K
960.50M
March 31, 2022 at 6:00:00 AM
3.89B
352.80M
8.49B
-
2.53B
1.2B
109.00M
- 25400.00K
541.00M
- 475000.00K
-
- 154400.00K
- 91800.00K
- 71500.00K
- 792700.00K
-
- 51700.00K
2.06B
2.11B
200.00M
- 29800.00K
170.20M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
WU
2023
2024
2025
2026
2027
$18.11
$19.24
$20.44
$21.71
$23.07