WEX Inc.’s (WEX - Free Report) stock has gained 46.4% year to date, outperforming 40.4% rally of the industry it belongs to.
With an expected long-term earnings per share growth rate of 14.6% and a market cap of $8.9 billion, WEX seems to be a stock that investors should retain in their portfolio for now.
What’s Driving the Company?
WEX continues to grow organically, driven by extensive network of fuel and service providers, transaction volume growth, product excellence, marketing capabilities, and sales force productivity. Acquisitions complement this growth by adding differentiation to products and service offerings, and enhancing scalability, thus contributing to revenues.
WEX Inc. Revenue (TTM)
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 second-quarter Health and Employee Benefit Solutions revenues (up 55% year over year) of $83.1 million.
The Noventis acquisition, completed recently, strengthened WEX’s position as a corporate payments supplier. This acquisition was a driver of 21% year-over-year growth of the company’s Travel and Corporate Solutions' revenues of $91.4 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 Jun 30, 2019, long-term debt was $2.8 billion while cash and cash equivalents were $768.4 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.
A few better-ranked stocks in the broader Zacks Business Services sector are ICF International (ICFI - Free Report) , Accenture (ACN - Free Report) and Charles River Associates (CRAI - Free Report) , each currently carrying a Zacks Rank #2 (Buy).
The long-term expected EPS (three to five years) growth rates for ICF, Accenture and Charles River are 10%, 10.3% and 13%, respectively.
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