Western Union Co., the world’s biggest money-transfer business, gained the most in three months after reporting second-quarter profit that exceeded analysts’ estimates.
Western Union climbed 4.5 percent to $17.75 in New York trading, the biggest move since May 1, and was the second-best performer in the Standard & Poor’s Information Technology Index. The shares have risen 30 percent this year, compared with the 10 percent advance of the 70-company index.
Net income for the three months ended June 30 was $198.6 million, or 36 cents a share, the Englewood, Colorado-based company said today in a statement, beating by two cents the average estimate of 29 analysts surveyed by Bloomberg.
“With 75 percent of Western Union’s planned pricing cuts complete, its earnings turnaround is showing small, initial progress,” Evercore Partners Inc. analysts led by David Togut wrote in a research note that raised their 2013 earnings-per-share estimate to $1.42 from $1.40. “Transaction growth improved in all five major WU regions.”
Western Union is on target to return to revenue and profit growth next year, Chief Executive Officer Hikmet Ersek, 52, said in the statement. In February, Ersek said that both would be reduced in 2013 as the company invested in its online business and cut prices to stay competitive as consumers shift away from cash.
“We’re really where we said we’d be at the second quarter, and we’re setting up that platform to grow on a long-term basis,” Chief Financial Officer Scott Scheirman said in a phone interview.
Consumer-to-consumer transactions, Western Union’s biggest revenue source, increased 3 percent in the three months ended June 30 compared with a 2 percent drop in the first quarter, according to the statement. The growth in transaction volume was bolstered by investments in online enhancements and by price reductions. The price cuts contributed to a 3 percent decline in revenue from a year earlier, the firm said.