Western Union Co., the biggest U.S. money-transfer business, on Monday said third- quarter profit rose 7 percent in its first report as a stand-alone company after being spun off last month from First Data Corp.
Greenwood Village-based First Data also reported third- quarter earnings that fell 34 percent on higher costs and accounting changes for valuing derivatives.
Western Union’s net income was $258.1 million, or 34 cents a share, the company said in a statement. The Douglas County-based firm said it would have earned $241.9 million a year earlier, or 32 cents a share, had it been independent. The average estimate of 19 analysts surveyed by Thomson Financial was 28 cents a share. Revenue rose 12 percent to $1.14 billion.
“Often in these spinoffs, the companies position themselves to do well out of the gate,” said Rod MacKinnon, portfolio manager at Mountain Pacific Investment Advisers Inc. of Boise, Idaho, which owns 420,432 shares. “They guide the expectations to a point where they can beat the initial forecasts, and consequentially the stocks tend to do well initially.” The shares gained 7 percent since trading began.
Western Union, which had been First Data’s biggest and fastest-growing unit, must now square off by itself against rival money-transfer services including Moneygram International Inc., whose quarterly profit rose 1.7 percent. At the same time, the Arizona attorney general is seeking to halt Western Union transfers from 29 states as part of a Mexican smuggling probe.
First Data said in a statement that net income fell to $342.2 million, or 44 cents a share, from $516.6 million, or 66 cents a share, a year earlier.
Profit from continuing operations excluding one-time items was 29 cents a share. Per-share estimates of 19 analysts surveyed by Thomson Financial ranged from 27 cents to 35 cents.
First Data distributed 765 million shares in Western Union to stockholders Sept. 29. The unit had been the company’s biggest and fastest-growing source of revenue.
