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WEX (WEX)
NYSE:WEX
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WEX
(NYSE:WEX)66Neutral
Positive Factors
Fleet Management
WEX is a market leader in Fleet Management due to its strong moat through its closed loop network and is the 'go to' solution for US truck drivers.
Investment Strategy
There is an upbeat sentiment about WEX's targeted investments to broaden corporate card capabilities and provide customers with more flexibility in funding accounts.
Negative Factors
Competitive Advantage
WEX’s markets have evolved such that it no longer possesses a competitive advantage in its non-mobility segments, which were more than 45% of 2024 revenue.
Corporate Payments Performance
Corporate Payments segment underperformed expectations due to lower purchase volumes and account servicing income.
Revenue Growth
WEX has lowered long-term growth targets for organic revenue and adjusted EPS, indicating growth challenges.
WEX (WEX) vs. S&P 500 (SPY)
Market Cap
$6.16B
Dividend YieldN/A
Average Volume (3M)648.59K
Price to Earnings (P/E)21.2
Beta (1Y)1.09
Revenue Growth3.15%
EPS Growth21.82%
CountryUS
Employees7,200
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)7.50
Shares Outstanding38,816,270
10 Day Avg. Volume708,462
30 Day Avg. Volume648,585
Financial Highlights & Ratios
PEG Ratio0.97
Price to Book (P/B)N/A
Price to Sales (P/S)2.34
Price to Cash Flow (P/CF)2.40
P/FCF Ratio2.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$179.20Price Target Upside12.87% Upside
Rating ConsensusHold
Number of Analyst Covering12
WEX Business Overview & Revenue Model
Company DescriptionWEX Inc. is a leading global provider of payment processing and business solutions, specializing in corporate payment solutions across various industries. The company operates through three primary sectors: Fleet Solutions, Travel and Corporate Solutions, and Health and Employee Benefit Solutions. WEX offers a range of services including fuel cards, corporate payment services, and healthcare benefit administration, designed to streamline and optimize operational efficiency for businesses of all sizes.
How the Company Makes MoneyWEX Inc. generates revenue through a diverse range of payment processing services tailored to specific industries. In its Fleet Solutions segment, WEX earns money by offering fuel card services that help businesses manage fleet expenses efficiently. The Travel and Corporate Solutions segment provides virtual payment solutions for travel and corporate expenses, earning fees from transaction processing and management. Meanwhile, the Health and Employee Benefit Solutions segment generates revenue by administering and managing health benefit accounts, such as Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), often earning fees from account management and transaction processing. Significant partnerships with financial institutions, travel companies, and healthcare providers enhance WEX's service offerings and expand its market reach, further contributing to its revenue streams.
WEX Financial Statement Overview
Summary
WEX demonstrates solid financial health with consistent revenue and profit growth. The company effectively manages its cost structure and maintains profitability. While leverage has improved, high debt levels remain a concern and present some risk. Cash flow generation is robust, providing flexibility for future investments. WEX is well-positioned in the software industry, but should continue to optimize its capital structure to enhance financial stability.Income Statement
WEX has shown a solid revenue growth trajectory, growing from $1.55 billion in 2020 to $2.63 billion in 2024. The gross profit margin is strong, as the gross profit aligns closely with total revenue, indicating efficient cost management. The net profit margin has improved significantly over the years, moving from a loss in 2020 to a healthy margin in 2024. EBIT and EBITDA margins are robust, though there was a notable decline in EBITDA margin in 2024. Overall, the company displays strong profitability metrics with room for improvement in EBITDA efficiency.75
Positive
Balance Sheet
The Debt-to-Equity ratio has decreased from 2020 to 2024, reflecting improved leverage management. However, the company maintains a relatively high level of debt compared to equity. The Return on Equity (ROE) has been increasing, demonstrating effective use of shareholder funds to generate profits. The equity ratio is lower, indicating a reliance on debt financing, which presents potential financial risk. Overall, while leverage is improving, the company's capital structure could benefit from further equity strengthening.68
Positive
Cash Flow
WEX exhibits strong cash flow generation, with positive operating cash flow exceeding net income, indicating good cash conversion. The free cash flow has seen significant growth, supporting the company's operational flexibility and ability to invest in growth opportunities. The free cash flow to net income ratio is favorable, indicating efficient use of generated profits. However, the decrease in operating cash flow in 2024 warrants close monitoring. Overall, the cash flow position is strong, supporting a healthy financial standing.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.63B | 2.55B | 2.35B | 1.85B | 1.56B | Gross Profit |
| 1.59B | 1.49B | 1.42B | 1.15B | 886.69M | EBIT |
| 686.30M | 647.10M | 469.84M | 342.00M | 171.06M | EBITDA |
| 975.00M | 849.20M | 649.87M | 630.66M | 133.77M | Net Income Common Stockholders |
| 309.60M | 266.60M | 201.40M | 136.14M | -280.48M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.36B | 4.00B | 2.32B | 1.54B | 852.03M | Total Assets |
| 13.32B | 13.88B | 11.53B | 10.31B | 8.18B | Total Debt |
| 1.29B | 3.87B | 2.72B | 2.85B | 3.03B | Net Debt |
| 697.40M | 2.89B | 1.80B | 2.26B | 2.17B | Total Liabilities |
| 11.83B | 12.06B | 9.88B | 8.21B | 6.15B | Stockholders Equity |
| 1.49B | 1.82B | 1.65B | 1.84B | 1.90B |
| Cash Flow | Free Cash Flow | |||
| 334.10M | 763.90M | 563.21M | 64.36M | 776.55M | Operating Cash Flow |
| 481.40M | 907.90M | 679.42M | 150.40M | 857.02M | Investing Cash Flow |
| -960.60M | -2.14B | -716.65M | -1.60B | -329.09M | Financing Cash Flow |
| -260.30M | 1.57B | 681.26M | 1.40B | -179.26M |
WEX Technical Analysis
Neutral
158.76
Price Trends
168.78
Negative
177.31
Negative
181.90
Negative
Market Momentum
-3.96
Negative
47.35
Neutral
54.76
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WEX, the sentiment is Neutral. The current price of 158.76 is above the 20-day moving average (MA) of 154.76, below the 50-day MA of 168.78, and below the 200-day MA of 181.90, indicating a neutral trend. The MACD of -3.96 indicates Negative momentum. The RSI at 47.35 is Neutral, neither overbought nor oversold. The STOCH value of 54.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WEX.
WEX Risk Analysis
WEX disclosed 56 risk factors in its most recent earnings report. WEX reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
WEX Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $11.66B | 22.83 | 34.88% | 0.70% | 11.19% | 51.03% | |
74 Outperform | $37.04B | 13.19 | 14.50% | ― | 10.06% | 38060.98% | |
73 Outperform | $24.80B | 16.25 | 6.94% | 0.99% | 4.68% | 63.39% | |
66 Neutral | $6.16B | 21.15 | 18.71% | ― | 3.15% | 21.82% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
51 Neutral | $37.28B | 49.64 | 4.65% | 2.02% | -17.38% | ― |
* Technology Sector Average
Performance Comparison
WEX
WEX
158.76
-71.71
-31.11%
FIS
Fidelity National Info
71.27
2.44
3.54%
GPN
Global Payments
100.77
-28.32
-21.94%
PAYC
Paycom
213.02
29.64
16.16%
XYZ
Block
60.00
-21.53
-26.41%
WEX Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: -15.00% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with record annual revenues and strong cash flow but challenges in the Corporate Payments segment and a cautious outlook with updated growth targets. While there are positive elements like growth in the Benefits segment and promising developments in direct AP, the overall sentiment is tempered by significant challenges and headwinds.Highlights
Record-Breaking Annual Revenue
WEX achieved a record high revenue of $2.6 billion for the fiscal year, marking a 3% growth compared to the previous year despite a 3% headwind from fuel prices and foreign exchange rates.
Strong Cash Flow and Margins
The company reported strong cash flow and exceptional margins, maintaining a leverage ratio of 2.6 times, which is at the low end of their long-term range of 2.5 to 3.5 times.
Positive Growth in Benefits Segment
The Benefits segment experienced a 4.9% increase in total revenues year-over-year, with custodial investment revenue rising by 17.9%.
Promising Direct AP Growth
Direct purchase volume, including AP automation solutions, grew more than 25% from Q4 2023 to Q4 2024.
Lowlights
Fourth Quarter Revenue Decrease
Q4 revenue was $637 million, a decrease of 4% year-over-year, with adjusted net income per diluted share down 6.5%.
Corporate Payments Segment Decline
Corporate Payments revenue declined by 22.7% year-over-year due to customer contract renegotiations and temporary volume reductions.
Updated Long-term Growth Targets
WEX adjusted its long-term organic revenue growth target from 8%-12% to 5%-10% and adjusted earnings per share target to a range of 10%-15%.
Impact of Macro Factors and Customer Losses
Growth was negatively affected by macro factors such as fuel prices, foreign exchange rates, and the trucking recession, as well as the loss of a Medicare Advantage customer.
Company Guidance
During the WEX Fourth Quarter and Full Year 2024 Earnings Call, several key financial metrics and guidance were highlighted. For the fiscal year, WEX reported a record high revenue of $2.6 billion, reflecting a 3% increase year-over-year, despite a 3% headwind from fuel prices and foreign exchange rates. Adjusted net income per share also grew by 3% year-over-year. Excluding these external factors, revenue growth was 6%, and adjusted net income per share grew by 11%. For the fourth quarter, revenue was $637 million, a 4% decrease from the previous year, with adjusted net income per diluted share at $3.57, marking a 6.5% decline. Adjusted EPS, excluding external factors, grew by 5%. Looking forward, WEX adjusted its long-term organic revenue growth target to a range of 5% to 10% and its adjusted earnings per share target to 10% to 15%, citing updated market insights.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.