Analyzing Qiwi (QIWI) and The Western Union (WU)

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

Institutional & Insider Ownership

17.5% of Qiwi shares are owned by institutional investors. 1.1% of The Western Union shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Qiwi and The Western Union, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Qiwi 0 2 2 0 2.50
The Western Union 5 4 1 0 1.60

Qiwi currently has a consensus target price of $22.67, suggesting a potential upside of 27.41%. The Western Union has a consensus target price of $19.61, suggesting a potential downside of 3.11%. Given Qiwi’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Qiwi is more favorable than The Western Union.

Dividends

Qiwi pays an annual dividend of $0.55 per share and has a dividend yield of 3.1%. The Western Union pays an annual dividend of $0.70 per share and has a dividend yield of 3.5%. Qiwi pays out 76.4% 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 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. Qiwi has raised its dividend for 3 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Qiwi 13.47% 20.98% 11.46%
The Western Union 3.83% 116.85% 9.25%

Valuation and Earnings

This table compares Qiwi and The Western Union’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Qiwi $295.00 million 2.71 $37.11 million $0.72 24.71
The Western Union $5.42 billion 1.71 $253.20 million $0.46 44.00

The Western Union has higher revenue and earnings than Qiwi. Qiwi 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.

Risk and Volatility

Qiwi has a beta of 3.23, indicating that its stock price is 223% more volatile than the S&P 500. Comparatively, The Western Union has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.

Summary

Qiwi beats The Western Union on 11 of the 17 factors compared between the two stocks.

Qiwi Company Profile

QIWI plc is a provider of payment services in Russia and the Commonwealth of Independent States (CIS). The Company’s network enables payment services across physical, online and mobile channels. The Company operates in target markets and customer segments. As of December 31, 2016, the Company had deployed over 17.2 million virtual wallets, over 162,000 kiosks and terminals, and enabled merchants to accept over Russian rubles 70 billion cash and electronic payments monthly. The Company’s consumers can use cash, stored value and other electronic payment methods to order and pay for goods and services across physical or virtual environments interchangeably. The Company provides integrated network of physical distribution points and virtual wallets, as well as payment channels and methods that enable consumers to deposit cash, convert it into a digital form and transfer the funds to a virtual wallet or pay for any merchant in its network.

The Western Union Company Profile

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.

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