First Data Corporation (NYSE: FDC) and Western Union Company (The) (NYSE:WU) are both mid-cap business services companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, analyst recommendations, valuation and risk.

Volatility and Risk

First Data Corporation has a beta of 1.77, meaning that its share price is 77% more volatile than the S&P 500. Comparatively, Western Union Company (The) has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Earnings & Valuation

This table compares First Data Corporation and Western Union Company (The)’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
First Data Corporation $7.91 billion 2.14 $2.79 billion $0.59 31.03
Western Union Company (The) $5.43 billion 1.63 $1.35 billion $0.39 48.82

First Data Corporation has higher revenue and earnings than Western Union Company (The). First Data Corporation is trading at a lower price-to-earnings ratio than Western Union Company (The), indicating that it is currently the more affordable of the two stocks.

Dividends

Western Union Company (The) pays an annual dividend of $0.70 per share and has a dividend yield of 3.7%. First Data Corporation does not pay a dividend. Western Union Company (The) pays out 179.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Union Company (The) has raised its dividend for 2 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and price targets for First Data Corporation and Western Union Company (The), as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Data Corporation 0 9 19 0 2.68
Western Union Company (The) 3 6 1 0 1.80

First Data Corporation currently has a consensus price target of $18.79, suggesting a potential upside of 2.61%. Western Union Company (The) has a consensus price target of $20.56, suggesting a potential upside of 7.96%. Given Western Union Company (The)’s higher possible upside, analysts plainly believe Western Union Company (The) is more favorable than First Data Corporation.

Profitability

This table compares First Data Corporation and Western Union Company (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Data Corporation 4.66% 26.25% 3.05%
Western Union Company (The) 3.50% 92.41% 9.04%

Insider and Institutional Ownership

39.1% of First Data Corporation shares are held by institutional investors. 6.3% of First Data Corporation shares are held by insiders. Comparatively, 1.1% of Western Union Company (The) shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

First Data Corporation beats Western Union Company (The) on 11 of the 17 factors compared between the two stocks.

About First Data Corporation

First Data Corporation is a provider of commerce-enabling technology and solutions for merchants, financial institutions and card issuers. The Company’s segments are Global Business Solutions (GBS), Global Financial Solutions (GFS), Network & Security Solutions (NSS), and Corporate. The GBS segment provides businesses of all sizes and types with a range of solutions at the point of sale, including merchant acquiring, e-commerce, mobile commerce, point-of-sale, and other business solutions. The GFS segment provides financial institutions, which include bank and non-bank issuers, such as retailers with card portfolios, with a range of solutions that enable them to offer financial products and solutions to their customers. The NSS segment provides a range of network solutions and security, risk and fraud management solutions to business and financial institution clients in its GBS and GFS segments, and to financial institutions, businesses, governments, processors and other clients.

About Western Union Company (The)

The Western Union Company (Western Union) is a provider of money movement and payment services. The Company operates through three segments: Consumer-to-Consumer, Consumer-to-Business and Business Solutions. The Company’s Consumer-to-Consumer segment facilitates money transfers between two consumers, primarily through a network of third-party agents. The Company’s Consumer-to-Business segment provides options to make one-time or recurring payments from consumers to businesses and other organizations, including utilities, auto finance companies, mortgage servicers, financial service providers and government agencies. Its Consumer-to-Business payments services are available through a range of services that include Speedpay, Pago Facil and Western Union Payments. Western Union’s Business Solutions segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals.

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