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WEX Gains 11% Despite Missing on Q3 Earnings and Revenues

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WEX Inc. (WEX - Free Report) reported weak third-quarter 2020 results, with earnings and revenues missing the Zacks Consensus Estimate. The stock gained 11% since the earnings release despite the lower-than-expected results.

Adjusted earnings of $1.59 per share missed the Zacks Consensus estimate by 9.1% and declined 39% year over year. Total revenues of $382.1 million surpassed the consensus mark by 2.9% and decreased 17% year over year.

Notably, WEX’s shares have declined 28.7% over the past year against 5.6% growth of the industry it belongs to.

Revenues by Segment

Fleet Solutions revenues (60% of total revenues) decreased 18% year over year to $228.7 million. This downside was due to pandemic-led unfavorable fuel prices and lower volumes.

Average number of vehicles serviced was 15.3 million, up 7% from the year-ago quarter’s figure. Total fuel transactions processed decreased 8% from the year-ago quarter’s tally to 149.6 million. Payment processing transactions were down 11% to 120.9 million. U.S. retail fuel price increased 7.7% to $2.23 per gallon.

Travel and Corporate Solutions revenues (17%) of $64.3 million were down 35% year over year. The decrease can be attributed to decline in revenues from travel-related customers. Purchase volume decreased 59% to $4.7 billion.

Health and Employee Benefit Solutions revenues (23%) of $89.1 million jumped 7%, year over year, on 11% growth in U.S. healthcare business. The average number of Software-as-a-Service (SaaS) accounts in the United States climbed 12% year over year to 14.6 million.

WEX Inc. Price, Consensus and EPS Surprise

WEX Inc. Price, Consensus and EPS Surprise

WEX Inc. price-consensus-eps-surprise-chart | WEX Inc. Quote

Operating Results

Adjusted operating income decreased 32% from the prior-year quarter’s figure to $125.4 million. Adjusted operating income margin declined to 32.8% from the year-ago quarter’s 40.2%.

Balance Sheet

WEX exited the quarter with cash and cash equivalents of $1.5 billion compared with $1.3 billion witnessed at the end of the prior quarter. Long-term debt was $2.9 billion, compared with $2.7 billion at the end of the previous quarter.

Currently, WEX carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Performance of Some Business Services Companies

Equifax Inc. (EFX - Free Report) reported third-quarter 2020 adjusted earnings of $1.87 per share that beat the Zacks Consensus Estimate by 16.2% and improved 26.4% on a year-over-year basis. Revenues of $1.07 billion outpaced the consensus estimate by 5.9% and improved 22% year over year.

ManpowerGroup Inc. (MAN - Free Report)  reported third-quarter 2020 earnings of $1.12 per share, beating the consensus mark by 90.5% but declining more than 37.5% year over year. Revenues of $4.58 billion surpassed the consensus mark by 8.7% but declined 12.7% year over year.

IHS Markit Ltd. (INFO - Free Report) recorded third-quarter fiscal 2020 adjusted earnings per share of 77 cents that surpassed the consensus estimate by 11.6% and increased 15% on a year-over-year basis. Total revenues came in at $1.07 billion, marginally surpassing the consensus mark but declining 4% from the year-ago quarter.

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