Stock RecommendationWestern Union (WU)by Gautam Guruprasad and Dang Le

Background

• Spun off from First Data Corporation Last September

Card Issuing

Services ATMSolutions

LoyaltySolutions

BillPaymentServices

Business Model

• Global Leader in Money Transfer Services (150 Year History)

• Location, Location, Location • 270,000 agents in more than 200 countries

• Fee structure• 10-20% for immediate agent transfer• 4-10% for three day bank account deposits

• Consumer to Consumer (C2C)• 2005 Revenue 3.0 Billion• 2005 EBIT 1.0 Billion

• Consumer to Business (C2B)• 2005 Revenue $600 Million• 2005 EBIT $220 Million

Management

• Christina Gold, CEO & Director• Sr. EVP of Western Union since May 2002 • Twenty years at Avon Canada and North

America serving as CEO and President for nine years

• One of Fortune Magazine’s 50 Most Powerful Women

Comparable Valuation

WesternUnion

MoneyGram GlobalPayments

Locations 270,000 100,000 1,000

Operating Margin

30% 16% 21%

ROA 22% 1.33% 12%

ROIC 35% 16% 15%

P/E 18.9 19.8 24.7

EPS 1.12 1.45 1.53

DCF Valuation

8% 9% 10% 11% 12%

10% 39.66 31.02 25.26 21.15 18.07

11% 41.51 32.46 26.44 22.14 18.07

12% 43.42 33.96 27.67 23.17 18.92

13% 45.40 35.51 28.93 24.24 19.81

14% 47.44 37.12 30.24 25.34 21.67

Gro

wth

WACC

Disclosure

• This presentation is for educational purposes only, and the opinions expressed do not constitute a recommendation to buy or sell for the individual. The authors may have a position in the companies discussed, subject to change at any time. Information in this presentation was obtained from reliable sources, but there is no guarantee of accuracy. Please consult your financial advisor before making investment decisions. Past performance is not indicative of future success.

Q&A

Thank You

It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. – Warren Buffett