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Here's Why You Should Retain WEX Stock in Your Portfolio
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WEX Inc. (WEX - Free Report) carries an impressive Growth Score of A. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.
The company has a market cap of $7.5 billion and its next five-year earnings growth is pegged at 8%. WEX shares have gained 24.2% over the past three months, outperforming the 13.8% rally of the industry it belongs to.
What’s Supporting the Rally
WEX’s top line continues to grow organically, driven by its extensive network of fuel and service providers, transaction volume growth, product excellence, marketing capabilities, sales-force productivity, and other strategic revenue generation efforts. The company’s revenues increased 5% organically in the first quarter of 2020.
The March 2019 acquisition of Discovery Benefits boosted WEX’s position as a technology platform in the healthcare space and enhanced its employee-benefits platform. The acquisition was the primary contributor to the 5% year-over-year growth of the company’s payment processing revenues and 71% growth of account servicing revenues in the first quarter of 2020.
Some Risks
WEX’s total debt to total capital ratio of 0.67 at the end of first-quarter 2020 was higher than the industry's 0.38 and the previous quarter’s 0.58. The increasing debt-to-capitalization ratio indicates that theproportion of debt to finance the company’s assets is on the rise. Higher debt as a percentage of total capital indicates that a company has a higher risk of insolvency.
Further, cash and cash equivalent balance of $1.03 billion at the end of the first quarter was below the short-term debt level of $1.28 billion, implying that the company doesn’t have enough cash to meet even its short-term debt burden.
The long-term expected earnings per share (three to five years) growth rate for DocuSign, SPS Commerce and SailPoint are at 31.2%, 15% and 15% respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Here's Why You Should Retain WEX Stock in Your Portfolio
WEX Inc. (WEX - Free Report) carries an impressive Growth Score of A. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.
The company has a market cap of $7.5 billion and its next five-year earnings growth is pegged at 8%. WEX shares have gained 24.2% over the past three months, outperforming the 13.8% rally of the industry it belongs to.
What’s Supporting the Rally
WEX’s top line continues to grow organically, driven by its extensive network of fuel and service providers, transaction volume growth, product excellence, marketing capabilities, sales-force productivity, and other strategic revenue generation efforts. The company’s revenues increased 5% organically in the first quarter of 2020.
WEX Inc. Revenue (TTM)
WEX Inc. revenue-ttm | WEX Inc. Quote
The March 2019 acquisition of Discovery Benefits boosted WEX’s position as a technology platform in the healthcare space and enhanced its employee-benefits platform. The acquisition was the primary contributor to the 5% year-over-year growth of the company’s payment processing revenues and 71% growth of account servicing revenues in the first quarter of 2020.
Some Risks
WEX’s total debt to total capital ratio of 0.67 at the end of first-quarter 2020 was higher than the industry's 0.38 and the previous quarter’s 0.58. The increasing debt-to-capitalization ratio indicates that the proportion of debt to finance the company’s assets is on the rise. Higher debt as a percentage of total capital indicates that a company has a higher risk of insolvency.
Further, cash and cash equivalent balance of $1.03 billion at the end of the first quarter was below the short-term debt level of $1.28 billion, implying that the company doesn’t have enough cash to meet even its short-term debt burden.
Zacks Rank & Key Picks
WEX currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are DocuSign (DOCU - Free Report) , SPS Commerce (SPSC - Free Report) and SailPoint Technologies . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for DocuSign, SPS Commerce and SailPoint are at 31.2%, 15% and 15% respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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