We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Retain WEX Stock in Your Portfolio
Read MoreHide Full Article
WEX Inc.’s (WEX - Free Report) shares have gained a massive 58.8% over the past six months, significantly outperforming the 11.4% rally of the industry it belongs to.
The company has an expected long-term earnings per share (three to five years) growth rate of 7.2%. Earnings for 2021 and 2022 are anticipated to grow 35.6% and 31.5%, respectively.
Factors Supporting the Rally
Acquisitions have acted as a key growth catalyst for WEX. The company has been actively acquiring and investing in companies, both in the United States as well as internationally, to expand its product and service offerings, thereby contributing to revenue growth and enhancing scalability. The 2019 acquisition of Go Fuel Card has expanded the company’s Fleet business throughout EG locations in the United States, Europe and Australia. Another acquisition, Discovery Benefits, has boosted its position as a technology platform in the healthcare space and enhanced its employee benefits platform. The Noventis buyout has expanded WEX’s corporate payments business.
WEX’s Health and Employee Benefit Solutions business has been performing extremely well on the back of strength in account servicing and payment processing. Revenues increased 6.3% year over year to $88.9 million in the fourth quarter of 2020.
Some Risks
WEX’s total-debt-to-total-capital ratio of 0.60 at the end of fourth-quarter 2020 was higher than the industry's 0.38 and the previous quarter’s 0.58. Higher debt-to-capitalization ratio indicates that the proportion of debt to finance the company’s assets is on the rise, and so is the risk of insolvency.
Further, cash and cash equivalent balance of $1.37 billion at the end of the quarter was well below the long-term debt level of $2.87 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. However, the cash level was enough to meet the short-term debt of $153 million.
The long-term expected earnings per share (three to five years) growth rate for Interpublic, Cross Country Healthcare and Charles River is pegged at 2.4%, 12% and 13%, respectively.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Image: Bigstock
Here's Why You Should Retain WEX Stock in Your Portfolio
WEX Inc.’s (WEX - Free Report) shares have gained a massive 58.8% over the past six months, significantly outperforming the 11.4% rally of the industry it belongs to.
The company has an expected long-term earnings per share (three to five years) growth rate of 7.2%. Earnings for 2021 and 2022 are anticipated to grow 35.6% and 31.5%, respectively.
Factors Supporting the Rally
Acquisitions have acted as a key growth catalyst for WEX. The company has been actively acquiring and investing in companies, both in the United States as well as internationally, to expand its product and service offerings, thereby contributing to revenue growth and enhancing scalability. The 2019 acquisition of Go Fuel Card has expanded the company’s Fleet business throughout EG locations in the United States, Europe and Australia. Another acquisition, Discovery Benefits, has boosted its position as a technology platform in the healthcare space and enhanced its employee benefits platform. The Noventis buyout has expanded WEX’s corporate payments business.
WEX’s Health and Employee Benefit Solutions business has been performing extremely well on the back of strength in account servicing and payment processing. Revenues increased 6.3% year over year to $88.9 million in the fourth quarter of 2020.
Some Risks
WEX’s total-debt-to-total-capital ratio of 0.60 at the end of fourth-quarter 2020 was higher than the industry's 0.38 and the previous quarter’s 0.58. Higher debt-to-capitalization ratio indicates that the proportion of debt to finance the company’s assets is on the rise, and so is the risk of insolvency.
Further, cash and cash equivalent balance of $1.37 billion at the end of the quarter was well below the long-term debt level of $2.87 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. However, the cash level was enough to meet the short-term debt of $153 million.
Zacks Rank and Stocks to Consider
WEX currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are The Interpublic Group of Companies (IPG - Free Report) , Cross Country Healthcare (CCRN - Free Report) and Charles River Associates (CRAI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected earnings per share (three to five years) growth rate for Interpublic, Cross Country Healthcare and Charles River is pegged at 2.4%, 12% and 13%, respectively.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
AccessZacks Top 10 Stocks for 2021 today >>