Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of money transfer giant Western Union (WU 1.02%) plunged 11% today after its quarterly results and outlook disappointed Wall Street.
So what: The stock has soared over the past year on signs of rebounding demand, but today's third-quarter earnings plunge of 20%, coupled with a downbeat view of 2014, is forcing Mr. Market to quickly sober up. Management cited a spike in compliance costs and rapidly increasing competition for the disappointing report, suggesting Western Union's turnaround is far from complete.
Now what: Don't expect the regulatory headwinds to let up anytime soon. "Due to the compliance expenses as well as a potential impact from new compliance procedures we do not expect growth in operating profit in 2014 at this time," CEO Hikmet Ersek said on a conference call with analysts. When you couple that cost overhang with Western Union's still-red-hot stock price, the risk/reward at this point doesn't seem appealing.
