WU Western Union Company

In an effort to provide its consumers a complete package of services related to money transfer, Moneygram International Inc. (MGI) has renewed its contract with Advance America, a financial service provider and an operating subsidiary of leading Mexican bank Grupo Elektra SA. The contract has been renewed for the next five years.

The news comes on the heels of Advance America’s acquisitions of CompuCredit that enriched the money transfer network by an extra 242 new locations together with 2,435 retail locations across the U.S, thus enhancing its reach.

With the intention of boosting its core products, Moneygram has been renewing contracts and entering into strategic alliances with a large number of companies. It recently renewed a contract with one of the largest department store chains in Mexico, Coppel, to facilitate the transfer of money through its 976 retail locations in that country.

It has further consolidated its presence in the Indian subcontinent by adding four more banks and 650 more locations, leading to a total of 2,500 locations across Pakistan.

We believe these initiatives undertaken by Moneygram are in line with its guidance to augment its total revenues by 7%–9%, as disclosed in its second quarter earnings report last month.

The company’s closest peer, Western Union (WU), is equally proactive in this field. While Moneygram is fast expanding by renewing contracts and forming alliances, Western Union is expanding organically by launching new products and entering into definitive agreements. It recently launched Western Union Gold Prepaid Card in the Philippines and signed an agreement with Michigan-based Citizens Bank to provide its global remittance service to Citizens Bank customers via its 219 branches across Ohio, Michigan and Wisconsin.

Moneygram’s shares gained 4 cents (or 0.3%) to close at $16.03 yesterday. The stock currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We maintain our long-term Neutral recommendation on Moneygram.

 
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