The Western Union (WU) vs. Xoom (XOOM) Financial Analysis

The Western Union (NYSE: WU) and Xoom (NASDAQ:XOOM) are both business services companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, profitability and earnings.

Profitability

This table compares The Western Union and Xoom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Western Union 3.83% 116.85% 9.25%
Xoom -37.74% -25.16% -21.82%

Earnings and Valuation

This table compares The Western Union and Xoom’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The Western Union $5.42 billion 1.71 $253.20 million $0.46 43.89
Xoom N/A N/A N/A ($1.19) N/A

The Western Union has higher revenue and earnings than Xoom. Xoom is trading at a lower price-to-earnings ratio than The Western Union, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for The Western Union and Xoom, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Western Union 6 5 1 0 1.58
Xoom 0 0 0 0 N/A

The Western Union presently has a consensus price target of $19.35, suggesting a potential downside of 4.16%.

Dividends

The Western Union pays an annual dividend of $0.70 per share and has a dividend yield of 3.5%. Xoom does not pay a dividend. The Western Union pays out 152.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. The Western Union has increased its dividend for 3 consecutive years.

Summary

The Western Union beats Xoom on 8 of the 9 factors compared between the two stocks.

About The Western Union

The Western Union Company (Western Union) is a provider of money movement and payment services. The Company operates through three segments: Consumer-to-Consumer, Consumer-to-Business and Business Solutions. The Company’s Consumer-to-Consumer segment facilitates money transfers between two consumers, primarily through a network of third-party agents. The Company’s Consumer-to-Business segment provides options to make one-time or recurring payments from consumers to businesses and other organizations, including utilities, auto finance companies, mortgage servicers, financial service providers and government agencies. Its Consumer-to-Business payments services are available through a range of services that include Speedpay, Pago Facil and Western Union Payments. Western Union’s Business Solutions segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals.

About Xoom

Xoom Corporation (Xoom) is engaged in the digital consumer-to-consumer international money transfer business. The Company offers money transfer services from the United States to around 32 countries and its cross-border bill payment services from the United States to approximately five countries. Xoom’s solutions offer its customers a way to send money to, and pay bills for family and friends from any Internet-enabled location. The Company’s operating platform provides various solutions for transferring funds internationally, such as origination, funding, disbursement and transaction processing. The Company’s technology platform includes a customer interface which enables customers to send transactions from its Website, mobile Website or mobile application, using a computer, a tablet or a mobile phone; a risk management system; a transaction processing platform, and a disbursement integration platform. The Company provides its services under the XOOM brand.

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