Western Union's Strong Quarter - The Future Looks Promising

Western Union reported excellent results Tuesday morning, beating analyst estimates (i.e., analysts "missed") and raising 07 guidance. International trends were very strong and domestic trends are improving.

The company restated its long-term growth targets of 10-12% top line, and 12-14% bottom line. Management also reiterated its intentions to continue returning capital to shareholders. They bought back more than 15M shares in Q3, and expect to ask the board to increase the repurchase authorization.

The future looks promising, as India and China represent only 5% of WU's business currently but revenues in each are growing >40%. WU re-signed several key relationships in the quarter and signed some new ones as well, including Wal-Mart in Canada.

Since they have been released from the constraints of operating within First Data, a new focus on innovation is becoming apparent. Partnerships with Google and Yodlee, an agreement to initiate a global cell phone-based payment network, and an early investigation into micro-finance opportunities will help WU "roar into 2008" according to CEO Gold.

I expect we'll see the stock do well Tuesday (it is up over 7% as I write), and I am happy to continue to hold it.

Disclosure: Author is long WU; see investment thesis for WU