StockCall Analysis on Western Union and MoneyGram: Getting Ready
for Frank-Dodd Legislation
LONDON, January 30, 2013 /PRNewswire/ --
Business Services
industries had a tough year in 2012. The sector saw intense
competition resulting in costly price wars. Major Service providers like The Western Union
Co. (NYSE: WU) and MoneyGram International Inc. (NYSE:MGI) resorted
to deep price cuts, putting pressure on their margins. StockCall
analysts have completed in-depth technical analysis on these two
companies. The free reports can be downloaded upon registration
at
http://www.stockcall.com/signup
The industry is also expected to see big changes in February
this year as the Dodd-Frank legislation is implemented. The new
regulations will increase the disclosure burden on the companies as
these will be required to make wider disclosures about foreign
exchange rates and fees.
MoneyGram Expands
Internationally
MoneyGram International Inc. is augmenting its business
operations internationally. It now has a 20,000 agent strong
presence in Africa. The company
operates in Africa through its
collaborator, Express Exchange. MoneyGram International suffered
net loss of $54.8 million in the
third quarter of the year, which was mainly attributable to the
company's settlement with the U.S. Attorney's Office, in connection
with the Middle District of Pennsylvania investigation. The stock
continued its plunge after the result declaration. Sign up now to
read the complete technical and charting analysis on MoneyGram
International at
http://www.StockCall.com/MGI012913.pdf
While the company is evolving and has inked quite a few new
collaborations, it still expects its fourth quarter and full year
numbers to be on the conservative side. It also moved its full year
forecast to the lower side of its previous projections. The company
expects its revenue to grow in the range of 7 to 9 percent while
its adjusted EBITDA is likely to expand by 9 to 11 percent. While
its stock performed well this year, so far, it is likely to face
pressure as its much bigger rival cuts down its fees for various
money transfer schemes. Such price wars may have negative impact on
the company's bottom-line.
MoneyGram International stock is expected to show moderate
growth this year as the company continues to feel constant pressure
from its much bigger rival Western Union Co. [Free technical Report
on WU](1). It also faces competition from online payment
processors such as PayPal.
Western Union Cuts
Fees
Western Union, the largest entity in the sector, performed
poorly in the market. While its stock lost about a quarter of its
value last year, the company offered a good 3.70 percent dividend
yield. It also approved new share repurchase program worth
$550 million. These steps are likely
to help reinstate investors' confidence in the stock. However, the
company also faces operational and strategic issues.
Western Union commands about 20 percent market share, but the
share is constantly declining due to smaller players working on
razor share margins. Lower fees charged by these outfits forced
Western Union to slash its charges for various transfers in
Latin America. The move may help
the company to increase its volume, but lower margins are likely to
cause negative impact on the company's financial health. The
company had made this announcement while releasing its third
quarter results and now is in the process of implementing it.
Western Union is also dealing with regulatory issues as it had
to close about 7,000 of its Vringo outlets due to compliance
concerns. However, in contrast to the previous year, the company
stock is expected to perform relatively better. Western Union's new
share repurchase program will also help investors in recouping
value.
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- Western Union Co. Technical Analysis [
http://www.StockCall.com/TheWesternUnionCo012913.pdf ]
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