Will a Weak CMT Unit Hamper Western Union's (WU) Q1 Earnings?

Core Viewpoint - Western Union is expected to report a decline in earnings and revenues for the first quarter of 2024, with earnings per share estimated at 40 cents, a 7% decrease from the previous year, and revenues projected at $1 billion, reflecting a 2.7% drop from the same quarter last year [2]. Group 1: Earnings Estimates - The Zacks Consensus Estimate for Western Union's first-quarter earnings per share is pegged at 40 cents, indicating a decline of 7% from the year-ago quarter's reported figure [2]. - The consensus mark for revenues is pegged at $1 billion, suggesting a 2.7% fall from the year-ago quarter's reported number [2]. Group 2: Earnings Surprise History - Western Union's bottom line has beaten estimates in each of the trailing four quarters, with an average surprise of 20.11% [3]. Group 3: Revenue Factors - Revenues in the first quarter are expected to benefit from the strength of the digital business and a stable retail business, driven by favorable transaction trends [4]. - The APAC region is likely to have contributed positively to Western Union's digital business through new customer gains and solid digital conversion rates [4]. - However, revenues in the Consumer Money Transfer (CMT) segment are expected to decline due to weakness in Europe, the Commonwealth of Independent States, and North America, although this may be offset by growth in the Middle East, Africa, South Asia, and Latin America [4]. Group 4: Segment Performance - The Zacks Consensus Estimate for the CMT unit's revenues is pegged at $921 million, indicating a 1.8% decline from the year-ago quarter's reported figure [5]. - The Consumer Services segment is expected to see revenue growth driven by retail money orders, bill payments, prepaid cards, lending products, and foreign currency exchange, with revenues estimated at $87 million, a 4.8% rise from the year-ago quarter [5]. Group 5: Cost Management - Western Union's margins are likely to improve due to cost-curbing initiatives, with total operating costs expected to decline by 1% year over year in the first quarter [6]. Group 6: Earnings Prediction Model - The current model does not predict an earnings beat for Western Union, as the Earnings ESP is 0.00% and the Zacks Rank is 4 (Sell) [7][8].