Four NYSE stocks hit new 52-week lows on Tuesday compared to 92 new 52-week highs. 

One of the four hitting a new 52-week low was Western Union (WU). Not only did the money transfer business hit its 35th 52-week low of the past 12 months, but it also hit an all-time low at $8.29. 

For those unfamiliar with Western Union’s history, the leader in global money transfer was spun off from First Data in September 2006. First Data’s shareholders got one new share of WU stock for every share in the parent. 

First Data was acquired by Fiserv (FI) on July 29, 2019, in an all-stock transaction valued at $22 billion. Each First Data share was exchanged for 0.303 Fiserv shares. Those shares are worth $52.32 today [$172.68 * 0.303], which is considerably higher than the value of one Western Union share. 

If you held Western Union stock from its spinoff in 2006 to today, the value destruction is significant. Western Union’s all-time high is $28.62. It hit that in August 2008, less than two years after your spinoff. It came close again in February 2020 at $28.44. 

Hopefully, if you were a First Data shareholder, you sold at either of these opportunities. Today, it’s no longer nearly as much of an opportunity as it once was. 

The question now is whether Western Union stock is worth more or less than $8.29. 

Is it an undervalued gem or a falling knife? The latter seems more likely, but here’s my two cents, just the same.

Western Union’s Best Days Are Behind It

Western Union has been a public company for about 15.5 years. In that time, it has generated revenue of over $5.5 billion in five fiscal years: 2012-2014, 2017, and 2018. Over the past six years, its revenue has declined from $5.59 billion in 2018 to $4.21 billion in 2024. 

In those six years, according to S&P Global Market Intelligence, its operating profits have fallen by 31%, to $771.3 million from $1.11 billion. Meanwhile, its operating margin has held up better, falling by 160 basis points from 19.9% in 2018 to 18.3% in 2024. 

The bad news on the margin front is that, although its operating margins have held up nicely, they were once much higher. In 2007, its first full year as a public company, its EBIT margin was 27.0%. The following year, it was 27.2%, the highest in its history as a public company. 

EBIT margins remained above 20% through 2016, returning to a 20%+ margin in 2020 and 2021, but they’ve since returned to the high teens. 

Now, I’m not an expert on the money transfer business, but I do know a headwind when I see one. It has significant competition. 

I use Wise for converting funds from U.S. dollars to Canadian dollars and other currencies. I’ve never used them for transferring money to other people, but I’ve never been disappointed with the service they provide, so I’m confident it's taking business away from Western Union. I’m sure other fintechs are too. 

Its best days are behind it. 

It Still Makes Money

In late May, Barchart contributor Zacks Investment Research suggested that Western Union’s stock was worthy of investor interest because of its high dividend yield. It’s currently nearly 11%. 

However, in addition to its attractive dividend yield, Zacks pointed out several risks to watch out for, one of which was its high total debt-to-capital ratio of 74.8% as of Q1 2025. 

Breaking that down, it had $2.79 billion in total debt as of March 31 and $939.4 million in common equity, totalling $3.73 billion in capital.

While that's high, Western Union’s total debt-to-capital ratio of 74.8% is the lowest it has been since 2015, when it was 69.6%. This ratio consists of $3.22 billion in total debt and $1.4 billion in common equity, totalling $4.62 billion in capital.

Its debt situation isn’t nearly as bad as one might conclude by merely looking at the ratio in isolation without any historical context. So, despite a decline in topline revenue over the past few years, its business model has maintained its profitability, which is key for any value investor to consider. 

Although its Q1 2025 report saw revenues decline 2% on an adjusted basis, excluding its Iraq business—which has experienced considerable disruption due to the country's monetary policy and central bank actions—there is some hope to be gleaned.

For example, its Branded Digital business, which accounts for 28% of the Consumer Money Transfer (CMT) segment’s revenue and 35% of transactions, saw transactions grow by 14% in the first quarter, the eighth consecutive quarter of double-digit transaction growth. As a result, revenue from Branded Digital rose 8% year-over-year. 

Over the past five years, the company’s goal was to reduce $150 million in expenses from its annual budget. It’s achieved all but $10 million of it as of the first quarter. It will get the $10 million in the remainder of 2025. 

As a result, it expects to generate $4.17 billion in revenue in 2025, at the midpoint of its guidance, with a 20% operating margin, and $1.80 in earnings per share. 

Trading at $8.67 as I write this, it has a forward P/E multiple of just 4.8x. There aren’t too many stocks on the NYSE with a P/E multiple this low.

The Bottom Line

Should you put 100% of your investment portfolio in WU stock as one fellow did to great success with Palantir Technologies (PLTR)? That would be a hard NO. 

That said, from 2007 to 2021, its forward P/E multiple was almost always in double digits—there were four quarters between Q2 2012 and Q1 2013 when the multiple was between 9.1x and 9.79x—with multiples only really deteriorating in late 2024 and into 2025.

It may face numerous headwinds, but like the theater business, the money transfer industry is not going away anytime soon, with Western Union’s brand remaining the strongest outside the U.S. 

While it may fall further, the risk-reward proposition is significantly in your favour at prices under $9.

On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.