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. 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.
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.
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Cardtronics PLC (CATM) : Free Stock Analysis Report
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