Western Union (WU): Valuation Insights Following New dLocal Partnership for Latin America Expansion

If you’re watching Western Union (WU) right now, you might be wondering what this new alliance with dLocal actually means for the company’s future. Announced just this week, Western Union’s move to partner with dLocal aims to inject more modern digital payment options into its platforms across Latin America. This region is seeing a surge in digital remittances, and the collaboration promises greater choice and flexibility for customers moving money internationally. This could make Western Union’s services more relevant and responsive in an increasingly digital world.

This announcement comes at a turning point, as digital financial solutions gain momentum in many of Western Union’s key markets. Despite these ambitious steps, Western Union’s stock performance has lagged over the past year, with the share price declining and long-term returns remaining under pressure. Recent months have not shown much relief, hinting at persistent investor caution even as the company seeks to reinvent its offerings for a new era.

So with Western Union doubling down on digital strategy yet the stock still trading lower, are we looking at a compelling value, or is the market already factoring in the growth potential from these changes?

Most Popular Narrative: 12% Undervalued

According to the most widely followed narrative, Western Union is trading significantly below what analysts consider its fair value. This discount reflects expectations that key business transformations and resiliency in remittance demand may not be fully reflected in the current share price.

The ongoing digital transformation, including expanded digital wallet offerings, card-based retail transactions, and value-added services, positions the company to capture a growing share of the large, underpenetrated market of financially included and mobile-first consumers. This supports improved revenue growth and higher long-term net margins due to better cost efficiency.

Want to know the secret behind this undervalued verdict? Analysts are betting on a strategic shift and new revenue mix to power up earnings and margins. But which bold projections are baked into their fair value? Get the full perspective on the critical numbers and assumptions shaping this striking valuation.

Result: Fair Value of $9.32 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent regulatory hurdles and fierce competition from nimble digital rivals could undermine Western Union’s digital shift and future profit expectations.

Find out about the key risks to this Western Union narrative.

Another View: What Does the SWS DCF Model Say?

While analysts see value through market-based assumptions, our SWS DCF model approaches Western Union in a different way. It evaluates the company's future cash flows and also suggests the shares are undervalued, although some may question the realism of these future projections. Which approach gives the clearest signal?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Western Union for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Western Union Narrative

If you see the numbers differently or want to challenge the current outlook, you can quickly dive in and build your own take in just minutes, Do it your way.

A great starting point for your Western Union research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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