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WEX Rides on Buyouts and Product Excellence, Debt Woes Stay

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WEX Inc. (WEX - Free Report) is benefiting from its extensive network of fuel and service providers, product excellence and acquisitions.

The company recently reported first-quarter 2021 adjusted earnings of $1.79 per share that surpassed the Zacks Consensus Estimate by 11.9% but slightly declined year over year. Total revenues of $410.8 million surpassed the consensus mark by a slight margin but declined 4.8% year over year.

Notably, WEX’s shares have increased 38.4% in the past year compared with 13.5% growth of the industry it belongs to.

 

Revenue-Generation Efforts

WEX’s strategic revenue-generation efforts include utilizing its extensive network of fuel and service providers, transaction volume growth, product excellence, marketing capabilities, and sales force productivity.

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 recently announced acquisition of benefitexpress is expected to expand WEX’s offerings in benefits administration by bringing in a complementary suite of solutions to its Health offerings. In 2020, WEX made acquisitions of eNett and Optal, both of which are expected to strengthen the company’s position in the global travel marketplace.

Debt Woes Remain

WEX’s cash and cash equivalent balance of $974 million at the end of first-quarter 2021 was well below the long-term debt level of $2.5 billion. This underscores that the company doesn’t have enough cash to meet this debt burden. Nevertheless, the cash level can meet the short-term debt of $354 million.

Zacks Rank and 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 ExlService (EXLS - Free Report) , Equifax (EFX - Free Report) and TransUnion (TRU - Free Report) , each carrying a Zacks Rank #2 (Buy).

The long-term expected earnings per share (three to five years) growth rate for Genpact, Equifax and TransUnion is 10.8%, 14% and 20.9%, respectively.

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