Mizuho Talks Results on Mobile Payments Firms WEX, Western Union

August 8, 2018         By: Steven Anderson

We’ve seen quite a bit come out of Mizuho Payments in the last couple of weeks, and now, two more firms are under the microscope. It’s sent us new reports about WEX and Western Union, and the news is somewhat mixed.

It was comparatively good news for WEX, a company that handles payments for the vehicle fleet markets.  Not only did Mizuho reassert its buy rating on WEX, but the company also beat both revenue and earnings per share (EPS) consensus figures. This despite the fact that the flow-through to 2018 fiscal year guidance was hurt a bit by issues in FX and a Chevron conversion process that was taking longer than expected.

With fuel prices improving—they’ve been at or under $3 a gallon for some time now—and some victories in the market, WEX has enjoyed double-digit revenue growth even amid declines in fraud losses thanks to fuel-related fraud.

Western Union, however, did not fare so well. Mizuho maintains a neutral rating on the company, as results missed consensus figures. With revenue reported as $1.411 billion—which is up two percent over last year—but expected to hit $1.43 billion, it’s no doubt a blow for Western Union. One of the biggest problems the company encountered was an overall slowdown which prompted some “pricing actions” that helped to turn things around a bit. “Saudization”, or infrastructure investments that were behind oil price increases, also delivered a hit.

Essentially, both firms found themselves responding to changing conditions in the market. While WEX managed to fend off the worst of the troubles, Western Union got a bit hamstrung in the changes and lagged a bit. Still, coming away from a Mizuho analysis with a “neutral” score in the worst case isn’t exactly a worst-case scenario; both firms did reasonably well here with conditions that are perhaps politely described as dynamic.

With a lot of change going on in the transport markets, firms like WEX and Western Union will have a lot more to deal with as the months go along. Improving their agility should probably be a high priority here to help the two firms better deal with rapid, perhaps even frantic, changes in the market.