Western Union Co , the world's largest payment transfer company, said it is looking to buy back more shares this year, but will stay away from bigger deals, such as last year's $970 million (600 million pounds) buy of Travelex's business payments unit, in the near term.

Hikmet Ersek, who took over as CEO in 2010, said he considered the company's stock to be undervalued and plans to be active on the capital deployment front this year.

The payment transfer company bought back stock worth $147 million in the first quarter and is authorised to spend another $470 million on share buybacks this year.

Western Union had also raised its quarterly dividend by 25 percent to 10 cents per share in February.

The company, which expects softness in Europe and Russia this year, had warned in February that 2012 could be impacted by macro challenges and currency.

Things are not better, things are not worse...(We are) still cautious, Ersek told Reuters.

Although the company was doing well in Germany, southern part of Europe was proving to be a bit of a challenge, he added.

The payment transfer company had bought Travelex's global business payments division in July last year to bolster its payments services for business customers.

We may acquire some small businesses (for a few million dollars), but we don't plan to spend a billion dollars in the near future. My focus now is the integration of the Travelex business, Ersek said.

The company, which reached 500,000 agent locations in 200 countries and territories in April, is trying to grow aggressively to reach a million, the CEO said.

Western Union backed its full-year earnings guidance, excluding integration costs, of $1.70 to $1.75 per share.

The company, which also provides bill payment and prepaid services, expects revenue to grow between 6 to 8 percent on a constant currency basis in 2012.

Western Union reported a first-quarter profit that was in line with analyst estimates.

First-quarter net income rose to $247.3 million, or 40 cents per share, from $210.2 million, or 32 cents per share, a year ago. Revenue rose 9 percent to $1.39 billion.

Western Union said its results for Europe and Russia were flat from a year ago. The region accounts for nearly 22 percent of its money transfer business.

Revenue from the company's core consumer-to-consumer unit grew 4 percent in the quarter.

The company's shares closed up 0.6 percent at $18.06 on Tuesday on the New York Stock Exchange.

(Reporting by Sharanya Hrishikesh in Bangalore; Editing by Supriya Kurane, Sreejiraj Eluvangal)