The Western Union Company

WU Details 

The Western Union Company (NYSE: WU) is a money transfer and payment service company that enables individuals and businesses to send and receive money worldwide. Its money transfer transactions are available in over 200 countries and via its websites and mobile applications. WU earns its revenue in the form of fees charged to customers for transferring money. As of November 22, 2021, the company's market capitalization stood at USD 6.84 billion.

Latest News:

• Management Changes: On November 15, 2021, WU announced the appointment of Devin B. McGranahan as its CEO, effective FY21 end, following the retirement of its current CEO Hikmet Ersek. Mr McGranahan carries an experience of 25+ years in the financial services and payment industry and previously held the position of Executive VP and Senior Group President, Global Business Solutions at Fiserv, Inc.
• Extension of Collaboration with Mastercard: On November 12, 2021, WU and Mastercard, a payments technology company, expanded their ten-year strategic partnership. This partnership strengthens the Mastercard Send integration into WU's global money movement network and Mastercard's Cross-Border Services delivery via WU Business Solutions, thus furthering the company's most prominent financial network strategy.
• Partnership with Metrobank: On November 04, 2021, WU designated Metropolitan Bank & Trust Company (Metrobank) as its newest direct bank account payout partner for inbound money transfers in the Philippines.

Q3FY21 Results:

• Flat in Topline: The company reported YoY growth of 2.21% in total revenue to USD 1.29 billion in Q3FY21 (ended September 30, 2021) compared to USD 1.26 billion in Q3FY20, driven by double-digit growth in the Business Solutions segment, partially offset by a marginal decline in Consumer-to-Consumer segment sales.
• Slight Growth in Profitability: WU reported an increase in net income to USD 232.7 million during Q3FY21 vs. USD 228.6 million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents of USD 1.0 billion and total debt of USD 2.85 billion.

Key Risks:

• Competition Risk: WU competes directly with several financial and non-financial business sectors in the highly competitive money transfer and business payments industry. Increased competition from new competitors, as well as the consolidation and growth of competitors' services, have had an impact on WU's distribution network and channel options. If this trend holds, its financials could be adversely affected.

Outlook:

FY21 Outlook (Source: Earnings Release, Q3FY21, November 02, 2021)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

WU Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

WU's stock price has declined 28.79% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 16.43 to USD 26.61. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 33.78. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 21.92.

Considering the significant correction in the stock price in the past nine months, strategic growth initiatives, strong profitability margins, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the closing price of USD 17.01, up 2.16% as of November 22, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Corsair Gaming, Inc.

CRSR Details

Corsair Gaming, Inc. (NASDAQ: CRSR) is a global designer and manufacturer of high-performance gaming and content creation equipment for all gamers and content creators. Its operating segments are 1) Gaming and Creator Peripherals, which distributes a range of gaming keyboards, mice, headsets, controllers, capture cards, stream decks, USB microphones, studio accessories, and other peripherals and 2) Gaming Components and Systems, which offers power supplies, cooling solutions, computer cases, DRAM modules, and gaming PCs. As of November 22, 2021, the company's market capitalization stood at USD 2.25 billion.

Latest News:

• Launch of New Gaming Keyboard: On November 09, 2021, CRSR launched the Flavor Rush Series, its CORSAIR K65 RGB MINI 60% mechanical gaming keyboards, available only in the US through its webstore. This launch kicks off the new CORSAIR COLLECTIONS product line, featuring limited-edition gaming gear with unique color combinations and designs.
• Ushering an Era of Double Data Rate 5 (DDR5): On October 27, 2021, CRSR unveiled DOMINATOR PLATINUM RGB DDR5 and VENGEANCE DDR5, which extend the performance limit further than ever before with next-gen platforms, starting with 12th Generation Intel CoreTM Processors and Z690 motherboards, with a speed of 5,200MHz and 32GB (per module) capacities.

Q3FY21 Results:

• Decline in Topline: The company reported a YoY decrease of 14.43% in total revenue to USD 391.12 million in Q3FY21 (ended September 30, 2021) compared to USD 457.10 million in Q3FY20, driven by YoY contraction of 13.80% and 14.78% in Gaming and Creator Peripherals and Gaming Components and Systems, segments respectively.
• Decline in Profitability: CRSR reported a decrease in net income to USD 1.78 million during Q3FY21 vs. USD 36.36 million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents of USD 71.92 million and total debt of USD 248.84 million.

Key Risks:

• Customer Concentration Risk: In YTD Q3FY21, CRSR's top ten largest customers represented 50.5% of its net revenue, with Amazon alone accounting for 26.4%. Hence, the loss of any of these key customers could harm the company's financials.

Outlook:

• FY21 Guidance: In FY21, CRSR expects to clock net revenue in the range of USD 1.825 – 1.925 billion, along with adjusted EBITDA to the tune of USD 190 – 205 million. Adjusted operating income is expected to range between USD 180 – 195 million.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CRSR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

CRSR's stock price decreased 41.37% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 23.81 to USD 51.37. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 35.46. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 30.81.

Considering the significant correction in the stock price, adequate balance sheet, recent product launches, positive outlook, and associated risks, we recommend a "Buy" rating on the stock at the closing price of USD 23.87, down 2.89% as of November 22, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.