Yahoo Finance Where WEX Inc (NYSE:WEX) Stands In Terms Of Earnings Growth Against Its Industry
Measuring WEX Inc’s (NYSE:WEX) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess WEX’s recent performance announced on 31 March 2018 and compare these figures to its historical trend and industry movements. View out our latest analysis for WEX
Commentary On WEX’s Past Performance
WEX’s trailing twelve-month earnings (from 31 March 2018) of US$179.50m has more than doubled from US$60.64m in the prior year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -1.89%, indicating the rate at which WEX is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is only owing to industry tailwinds, or if WEX has seen some company-specific growth.
Over the last few years, WEX top-line expansion has outstripped earnings and the growth rate of expenses. Though this resulted in a margin contraction, it has lessened WEX’s earnings contraction. Scanning growth from a sector-level, the US it industry has been growing its average earnings by double-digit 15.56% in the past year, and 11.27% over the past half a decade. This suggests that whatever uplift the industry is deriving benefit from, WEX is capable of leveraging this to its advantage.
In terms of returns from investment, WEX has not invested its equity funds well, leading to a 10.14% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 4.05% is below the US IT industry of 7.05%, indicating WEX’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for WEX’s debt level, has declined over the past 3 years from 7.18% to 5.24%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 83.36% to 137.44% over the past 5 years.
What does this mean?
Though WEX’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as WEX gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research WEX to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for WEX’s future growth? Take a look at our free research report of analyst consensus for WEX’s outlook.
Financial Health: Is WEX’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
