Visa (NYSE:V) & Western Union (NYSE:WU) Critical Comparison

Visa (NYSE:VGet Free Report) and Western Union (NYSE:WUGet Free Report) are both business services companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, earnings, institutional ownership, analyst recommendations, valuation and profitability.

Profitability

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

Net Margins Return on Equity Return on Assets
Visa 53.92% 50.02% 20.83%
Western Union 14.37% 113.63% 7.86%

Analyst Ratings

This is a breakdown of current ratings and price targets for Visa and Western Union, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Visa 0 5 17 0 2.77
Western Union 3 8 0 0 1.73

Visa presently has a consensus target price of $295.82, indicating a potential upside of 6.00%. Western Union has a consensus target price of $13.05, indicating a potential downside of 6.68%. Given Visa’s stronger consensus rating and higher probable upside, research analysts plainly believe Visa is more favorable than Western Union.

Dividends

Visa pays an annual dividend of $2.08 per share and has a dividend yield of 0.7%. Western Union pays an annual dividend of $0.94 per share and has a dividend yield of 6.7%. Visa pays out 23.9% of its earnings in the form of a dividend. Western Union pays out 56.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Visa has increased its dividend for 16 consecutive years.

Volatility & Risk

Visa has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500. Comparatively, Western Union has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500.

Insider and Institutional Ownership

82.2% of Visa shares are owned by institutional investors. Comparatively, 91.8% of Western Union shares are owned by institutional investors. 0.2% of Visa shares are owned by insiders. Comparatively, 0.7% of Western Union shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Visa $32.65 billion 15.70 $17.27 billion $8.69 32.12
Western Union $4.36 billion 1.10 $626.00 million $1.68 8.32

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

Summary

Visa beats Western Union on 13 of the 17 factors compared between the two stocks.

About Visa

(Get Free Report)

Visa Inc. operates as a payment technology company in the United States and internationally. The company operates VisaNet, a transaction processing network that enables authorization, clearing, and settlement of payment transactions. It also offers credit, debit, and prepaid card products; tap to pay, tokenization, and click to pay services; Visa Direct, a solution that facilitates the delivery of funds to eligible cards, deposit accounts, and digital wallets; Visa B2B Connect, a multilateral business-to-business cross-border payments network; Visa Cross-Border Solution, a cross-border consumer payments solution; and Visa DPS that provides a range of value-added services, including fraud mitigation, dispute management, data analytics, campaign management, a suite of digital solutions, and contact center services. The company also provides acceptance solutions, which include Cybersource that provides modular and value-added services for connecting merchants to payment processing; risk and identity solutions, such as Visa Advanced Authorization, Visa Secure, Visa Risk and Decision Manager, Visa Consumer Authentication Service, and payment-decisioning solutions for fraud prevention; and Visa Consulting and Analytics, a payment consulting advisory services. It provides its services under the Visa, Visa Electron, Interlink, V PAY, and PLUS brand names. The company serves merchants, financial institutions, and government entities. Visa Inc. was founded in 1958 and is headquartered in San Francisco, California.

About Western Union

(Get Free Report)

The Western Union Company provides money movement and payment services worldwide. The company operates through Consumer Money Transfer and Consumer Services segments. The Consumer Money Transfer segment facilitates money transfers for international cross-border and intra-country transfers, primarily through a network of retail agent locations, as well as through websites and mobile devices. The Consumer Services segments offers bill payment services, which facilitate payments for consumers, businesses, and other organizations, as well as money order services, retail foreign exchange services, prepaid cards, lending partnerships, and digital wallets. The company was founded in 1851 and is headquartered in Denver, Colorado.

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