- Western Union is seeing better gross profitability which indicates that it will generate better returns
- Gross profitability, a quality factor, is much more powerful in predicting returns based on the findings of a professor at the University of Rochester
- Brokers are saying that Western Union’s long bull run has already reached its peak, but other experts disagree
International payments brand Western Union is enjoying a good position in the stock market, according to reports, but brokers and investors should not only focus on the usual indicators, based on the findings of an expert. University of Rochester professor Robert Novy-Marx recently discovered that gross profitability is a good factor to look into when making investments. The quality factor, according to Novy-Marx, can predict stock returns better than other indicators. Although other quality measures have the capability to predict returns in conjunction with value measures, gross profitability is a good standalone measure, particularly for investors looking into large cap stocks. The remittance giant currently has a gross profitability of 0.254435.
While Western Union stocks have always enjoyed a good position in the market, some investors are reportedly lamenting their previous decision of not taking advantage of the firm’s long bull run. The growth of the company is unstoppable, reports note, considering the fact that the company has millions of customers who send money home on a regular basis. Adding its recent partnership agreements to the mix will only increase the firm’s growth, experts add.
Speculation is still ruling the stock market though despite Novy-Marx’s findings, as other experts believe that Western Union stocks are now on their way towards a decline, but others remain adamant that the ceiling has been adjusted and the company has room for its stocks to go higher. No one is sure which way it will go by the year-end of 2019 but one thing is for sure, experts comment, all brokers have to do is employ the gross profitability strategy to get a better insight into Western Union's stock direction.
It is noted, however, that the firm’s next earnings report will provide an insight to brokers and investors alike. Based on Professor Novy-Marx’s findings, investors should look into the top line and just ignore the bottom line. In one of the professor’s papers, he compared this quality factor with the Greenblatt magic formula, the Piortoski F-Score, and other popular strategies.
Experts add that while the stock market is doing well at the moment, there will likely be some rough patches along the way, as this is how markets behave. In fact, it has been noted by investors that they’d welcome a pullback so they can get the stocks they want at affordable rates. This buying opportunity is a good way to increase holdings, they add.
Western Union’s sustained future growth is a good sign for brokers as indicated by previous news reports about their recent partnerships with other companies, the most notable of which is an e-wallet partnership with Coins.ph, a brand that services remittance receiving countries such as Indonesia and the Philippines. Brokers are advised by experts to closely monitor the company to see if it will outperform others after the release of its earnings report.
Find out more about the Western Union Company by taking a look at our thorough review of their financial services.
