Western Union Has a Moat, but Also Has Limited Growth Prospects

Western Union's primary macroeconomic exposure is to employment markets in the developed world, as the search for better economic opportunities is the fundamental driver for money transfers. While conditions have improved over time in the United States and Europe, a region that is about equally important for Western Union as the US, growth remains modest, with new entrants adding to the issues for legacy operators like Western Union. At this point, we don't see a long-term catalyst to meaningfully improve growth, with management focused on just stabilizing the business in the near term. Recent geopolitical events have been an additional headwind as the company made the decision to exit Russia, a significant money transfer market. We continue to believe Western Union has a moat based on its sizable scale advantage, but with a stagnant top line and limited long-term growth prospects, the amount of value the moat will create could be questioned.