Filed under: Earnings reports, Analyst upgrades and downgrades, Google (GOOG), Wal-Mart (WMT), Technical Analysis, Western Union (WU), Stocks to Buy

Do you know which company introduced the first consumer charge card? No? It also introduced the first successful stock ticker and was one of the original eleven stocks in the Dow Jones Average. Still no? What if I say that it completed the first transcontinental telegraph line across North America? Now you have it! Of course, the telegram is a memory.

Western Union Company (NYSE: WU) provides a range of money transfer and bill payment services worldwide. Its consumer-to-consumer operations involve multi-currency and real-time processing systems for walk-in, online, and telephone money transfers. Its consumer-to-business operations enable payments to utilities, auto finance companies, mortgage servicers, financial service providers, and governmental agencies. The firm also offers money order products and advance payment services. Western Union does business through a network of more than 320,000 locations, in over 200 countries and territories.

Investors were pleased last week, when the company reported Q3 EPS of 30 cents and revenues of $1.26 billion. The Street had been looking for 28 cents and $1.26 billion. D.A. Davidson subsequently upgraded the shares to “buy,” noting improved business in Mexico and optimism over newer relationships with Wal-Mart Stores Inc. (NYSE: WMT) and Google Inc. (NASDAQ: GOOG). Management also guided FY07 EPS to $1.11-$1.13, versus consensus of $1.08. The share price popped on the news and then moved into a bullish “flag” consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Altogether, brokers recommend the issue with six “strong buys,” five “buys,” eleven “holds” and one “sell.” Analysts expect a 14% growth rate, through the next year. The WU P/E ratio (20.42), Price to Free Cash Flow ratio (14.60), Operating Margin (27.13%), Net Profit Margin (17.45%), Return on Assets (15.50%), Return on Investment (23.26%) and Net Income per Employee ($140.88k) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 83% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $17.96 and $24.14. A stop-loss of $18.70 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

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This entry was posted on Wednesday, October 31st, 2007 at 10:39 pm and is filed under Employment opportunities. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.