Western Union (NYSE:WU) falls 14% after trimmed profit highlights 13% dividend yield

Western Union ended the session at $7.69, falling 4.9%, as the S&P MidCap 400 gained 0.8%. At 6:57 p.m. ET, its shares slid further to $6.98, down an additional 9.2%. The Wall Street Journal The company’s Q2 adjusted earnings per share came in at $0.31, lower than both last year’s $0.42 and the $0.42 anticipated by FactSet. Revenue edged down just 1%, but the adjusted operating margin dropped by four percentage points. The Wall Street Journal The market’s move points to earnings and outlook concerns, rather than a sharp revenue shortfall.

Western Union revised its adjusted EPS forecast to $1.25–$1.35, down from the previous $1.75–$1.85 range. This reduces the midpoint by $0.50, equating to a drop of nearly 28%. The guidance for adjusted revenue growth was lowered to 4%–6%, compared with the prior 6%–9% range. Western Union Investor Relations The updated forecast is based on the expectation that Intermex will close on September 1. The timing of the deal remains uncertain, as final regulatory approval has not yet been secured.

Branded Digital transactions increased by 25%, though adjusted revenue climbed just 6%. Branded Digital accounted for 43% of CMT transactions while contributing 32% of revenue, highlighting an eleven-point difference that signals lower-than-average revenue per digital transaction. CMT revenue slipped by 2%, even with total CMT transactions up 3%. The Digital segment is posting real growth, but monetizing that growth continues to be a greater challenge.

Adjusted revenue in North America dropped 8% and transactions slipped 5% in Q2. Despite the decline, the region accounted for 36% of CMT revenue, making the softness significant. Q4cdn Management reported that Americas retail did not see the anticipated improvement. The Q2 decrease in adjusted revenue was less steep than the 10% drop seen in Q1. A short-term rebound is possible, but no clear signs have emerged. Q4cdn

The most recent quarterly dividend stood at $0.235 per share, equivalent to an annualized $0.94. With shares at $7.69, the stated yield was 12.2%, and about 13.5% after hours. Western Union Investor Relations The company’s new guidance points to a payout range of 70%–75% of adjusted EPS. Operating cash flow minus capex, a basic liquidity measure, came in at $125.7 million, below the $152.8 million paid out in dividends. Cash flow figures can fluctuate mid-year. Cash holdings of $919.8 million support near-term obligations, though reserves are thinner than before.

Western Union will acquire Intermex for around $500 million in cash. The initial scenario projected more than $0.10 in adjusted EPS accretion during the first full year and anticipated achieving $30 million annual cost synergies within 24 months. Western Union Investor Relations Key regulatory sign-offs are still pending, including from New York’s financial authority. Management is guiding to a September 1 closing, but that timing is uncertain. Given $2.70 billion in debt, postponed synergies have greater significance now.

Adjusted operating margin stood at 15%, decreasing from 19% in the same period a year ago. Service costs went up by 5%, and selling, general and administrative expenses were 7% higher. Revenue dipped by 1%, leading to expenses becoming less favorable. Management indicated that cost reductions are set to speed up in the second half. With annual revenue of about $4 billion, every margin point represents close to $40 million. Regaining four points in margin would be approximately $160 million, subject to mix effects.

Shares at $7.69 traded at 5.7–6.2 times 2026 adjusted EPS guidance, while after-hours trading at $6.98 lowered the range to about 5.2–5.6 times. The Wall Street Journal FactSet shows a consensus rating of Underweight, with price targets between $7 and $10, and an average of $8.18. These targets may not take into account the guidance cut given on July 30. The Wall Street Journal Using a simple five-to-seven-times guidance approach results in a range of $6.25–$9.45, with a midpoint of $7.80 at six times. The stock’s discount looks compelling only if margins hold and the dividend is preserved.