Western Union (NYSE:WU) vs. DLocal (NASDAQ:DLO) Head to Head Review

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

Insider & Institutional Ownership

91.8% of Western Union shares are held by institutional investors. Comparatively, 90.1% of DLocal shares are held by institutional investors. 3.3% of Western Union shares are held by company insiders. Comparatively, 45.4% of DLocal shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Western Union pays an annual dividend of $0.94 per share and has a dividend yield of 10.2%. DLocal pays an annual dividend of $0.77 per share and has a dividend yield of 5.7%. Western Union pays out 61.8% of its earnings in the form of a dividend. DLocal pays out 120.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Union is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Western Union and DLocal”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Western Union	$4.05 billion	0.71	$499.60 million	$1.52	6.04
DLocal	$1.09 billion	3.65	$196.80 million	$0.64	21.14

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

Risk & Volatility

Western Union has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500. Comparatively, DLocal has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Western Union	12.33%	62.01%	7.09%
DLocal	18.00%	40.40%	15.43%

Analyst Recommendations

This is a breakdown of current recommendations for Western Union and DLocal, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western Union	5	10	0	0	1.67
DLocal	0	2	6	1	2.89

Western Union presently has a consensus price target of $8.82, suggesting a potential downside of 3.89%. DLocal has a consensus price target of $17.00, suggesting a potential upside of 25.65%. Given DLocal’s stronger consensus rating and higher probable upside, analysts plainly believe DLocal is more favorable than Western Union.

Summary

DLocal beats Western Union on 10 of the 17 factors compared between the two stocks.

About Western Union

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.

About DLocal

DLocal Limited operates a payment processing platform worldwide. The company offers pay-in solution which the business and get paid for their products and services through various payment methods, including international and local cards, online bank transfers and direct debit, cash, and alternative payment methods. It also provides pay-out solution used for merchants to scale pay-out operations. In addition, the company offers dLocal for Platforms, an end-to-end payment solution that offers a range of services to help platforms manage payments. It serves its products to commerce, streaming, ride-hailing, financial services, advertising, SaaS, travel, e-learning, on-demand delivery, and gaming and crypto industries. DLocal Limited was founded in 2016 and is headquartered in Montevideo, Uruguay.