UK Markets open in 7 hrs 8 mins

Here's Why You Should Retain WEX Stock in Your Portfolio

Zacks Equity Research

WEX Inc.’s WEX stock has gained 40.8% year to date, outperforming the 39.9% rally of the industry it belongs to.

With an expected long-term earnings per share growth rate of 14.4% and a market cap of $8.5 billion, the company seems to be a stock that investors should retain in their portfolio for now.

 

 

Factors Aiding the Company

WEX’s top line continues to grow organically, driven by its extensive network of fuel and service providers, transaction volume growth, product excellence, marketing capabilities, sales force productivity, and other strategic revenue generation efforts.

Robust demand for its payment processing, account servicing and transaction processing services along with operational efficiency has helped WEX to generate solid revenues and earnings.

WEX Inc. Revenue (TTM)

 

WEX Inc. Revenue (TTM)

WEX Inc. revenue-ttm | WEX Inc. Quote

The recent acquisition of Discovery Benefits boosted WEX’s position as a technology platform in the healthcare space and enhanced its employee benefits platform. It added $25 million to the company’s third-quarter Health and Employee Benefit Solutions revenues (up 54% year over year) of $83.3 million.

Another recent acquisition of Noventis strengthened WEX’s position as a corporate payments supplier. This acquisition was a driver of 20% year-over-year growth of the company’s Travel and Corporate Solutions revenues of $99.1 million.

Last Words

Despite riding on significant growth prospects, WEX is not free from overhangs. The company has a debt-laden balance sheet and faces seasonal fluctuations in revenues. As of Sep 30, 2019, long-term debt was $2.7 billion, while cash and cash equivalents were $531.4 million. Nevertheless, we believe that product excellence, extensive network of fuel and service providers, and acquisitions bode well for WEX in the long term.

Zacks Rank & Stocks to Consider

WEX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Global Payments GPN, Mastercard MA and Cardtronics CATM. While Global Payments currently sports a Zacks Rank #1, Mastercard and Cardtronics carry a Zacks Rank #2 (Buy).

Long-term expected EPS (three to five years) growth rates for Global Payments, Mastercard and Cardtronics are 17%, 16% and 4%, respectively.

Free: Zacks’ Single Best Stock Set to Double

Today you are invited to download our just-released Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.

Download Free Report Now >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Cardtronics PLC (CATM) : Free Stock Analysis Report
 
WEX Inc. (WEX) : Free Stock Analysis Report
 
Mastercard Incorporated (MA) : Free Stock Analysis Report
 
Global Payments Inc. (GPN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.