Back to top

Image: Bigstock

Here's Why You Should Retain WEX Stock in Your Portfolio Now

Read MoreHide Full Article

WEX Inc. (WEX - Free Report) has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. It has a long-term (three to five years) expected earnings growth rate of 5%.

WEX’s Tailwinds

WEX is a leader in the fleet payments industry, providing payment solutions for fuel management, corporate travel and healthcare. Its dominance in this niche market gives it a competitive advantage, and it benefits from long-term customer relationships and the recurring nature of its services. Fleet operators rely on WEX's solutions for better fuel efficiency and cost management.

The company has effectively diversified its operations across three segments: Mobility, Corporate Paymentsand Benefits. This diversification provides the company with multiple revenue streams and reduces its reliance on any one industry. As a result, WEX is better positioned to weather economic volatility in specific sectors, such as travel or healthcare, which adds to its overall resilience.

The company has led the way in leveraging technology to create innovative payment and data analytics solutions. WEX’s focus on enhancing user experience through mobile apps, real-time data tracking and digital payment solutions gives it an edge over competitors. This innovation in payment solutions not only improves customer loyalty but also helps attract new clients, especially in a technology-driven market.

WEX’s top line continues to grow organically, driven by its extensive network of fuel and service providers, product excellence, marketing capabilities and other strategic revenue generation efforts. Robust demand for its payment processing, account servicing, and transaction processing services and operational efficiency have helped WEX achieve solid revenue and earnings growth. Further, the company’s strategic acquisitions should complement its organic growth by contributing to revenues, adding differentiation to its products and service offerings and enhancing scalability.

Some Risks for WEX

The payment solutions industry is competitive, with many players offering similar services. WEX faces strong competition from both established companies and fintech startups, which could exert pressure on pricing and margins. As these competitors innovate, WEX will need to continually invest in new technologies to maintain its edge.

The company does not pay out cash dividends. So, the only way to achieve a return on investment in its stock is share price appreciation, which is not guaranteed. Investors seeking cash dividends may avoid buying WEX shares.

WEX’s Zacks Rank & Stocks to Consider

WEX currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader Zacks Business Services sector are AppLovin (APP - Free Report) and PagSeguro Digital Ltd. (PAGS - Free Report) , each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AppLovin has a long-term earnings growth expectation of 20%. APP delivered a trailing four-quarter earnings surprise of 23.5%, on average.

PagSeguro Digital has a long-term earnings growth expectation of 13.6%. PAGS delivered a trailing four-quarter earnings surprise of 9.3%, on average.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


AppLovin Corporation (APP) - free report >>

WEX Inc. (WEX) - free report >>

PagSeguro Digital Ltd. (PAGS) - free report >>

Published in