- Revenue Decline Amid Earnings Growth: Fourth-quarter revenue fell 5% to $1.0B, but adjusted EPS rose to $0.45 (up from $0.40 YoY), driven by cost efficiencies and consumer services growth.
- Consumer Services Outperformance: Adjusted revenue surged 26% in Q4 and 30% annually, fueled by travel money (+$150M target by 2026) and bill payments, despite CMT declines.
- Digital Transformation Momentum: Branded digital business grew 6% in Q4 with 13% transaction growth; digital now accounts for 40%+ of principal sent globally, with double-digit transaction growth for two years.
- Strategic Acquisitions & Partnerships: Intermex acquisition (Q2 2026 close) and new retail deals (e.g., Kroger, Canada Post) expected to generate $100M+ in incremental revenue annually.
- Shareholder Returns & Guidance: Returned $500M to shareholders in 2025; 2026 guidance targets 6–9% revenue growth and adjusted EPS of $1.75–$1.85, with EPS acceleration from Intermex synergies.
Revenue and Earnings Performance
The company's Consumer Money Transfer (CMT) business saw adjusted revenue decline 9% in the fourth quarter, while transactions declined 2%. However, the branded digital business grew adjusted revenue by 6% and transactions by 13% in the quarter. The company's digital business now accounts for over 40% of the principal it sends around the world and is growing transactions double digits and revenue mid-single digits for two straight years.
Growth Prospects and Outlook
The company is optimistic about its longer-term outlook, with a focus on building a digital-first, retail-enabled consumer services company powered by payments and innovation. Western Union expects 6-9% revenue growth in 2026, inclusive of Intermex, and adjusted EPS of $1.75-$1.85. Analysts estimate revenue growth at 3.5% for next year, indicating a potential upside. The company's consumer services business is expected to grow double-digit annually over the next several years.
Valuation and Dividend Yield
With a P/E Ratio of 5.89 and a Dividend Yield of 10.15%, Western Union's valuation appears attractive. The company's return on equity (ROE) is 53.92%, indicating strong profitability. The dividend yield is also attractive, suggesting that the stock may be a good option for income investors. The company's free cash flow yield is 13.35%, indicating a strong ability to generate cash.
Strategic Initiatives and Expansion
Western Union is expanding its digital master agent model to include larger digital players in certain regions, opening up new market opportunities. The company is also partnering with digital players in the Middle East to accelerate growth. In Europe, Western Union believes it is underperforming the market and plans to make changes to its approach, model, and leadership to drive acceleration. The company's stablecoin initiative is focused on creating efficiency in the global movement of money, particularly between the company and its partners.