HomeMost PopularInvestingWEX Stock: Analyzing the 42% Rise and What it Means for Investors

WEX Stock: Analyzing the 42% Rise and What it Means for Investors

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Over the past year, shares of WEX Inc. (WEX) have experienced a remarkable surge, with a 42.1% increase. This significant growth outperforms both the industry it belongs to and the Zacks S&P 500 composite, which saw rises of 26.2% and 22.8%, respectively. So what exactly is driving this impressive upside, and what does it mean for investors?

Reasons for the Upside

WEX credits its organic growth to several key factors. Its extensive network of fuel and service providers, along with increased transaction volume growth, product excellence, marketing capabilities, and sales force productivity, have all contributed to its top-line growth. Additionally, robust demand for WEX’s payment processing, account servicing, and transaction processing services, combined with operational efficiency, have resulted in solid revenue growth.

Strategic acquisitions have also played a role in WEX’s success, adding value through increased revenue, differentiation in product offerings, and enhanced scalability. The recent acquisition of benefitexpress further broadened WEX’s benefits administration solutions, strengthening its presence in the market.

Favorable Estimate Revisions

When it comes to assessing the potential of a stock, it’s crucial to analyze the direction of estimate revisions. In the case of WEX, three estimates for 2023 have moved upwards in the past 60 days, reflecting analysts’ confidence in the company. This positive sentiment is also reflected in the 0.2% increase in the Zacks Consensus Estimate for 2023 earnings over the same period.

Stocks to Consider

While WEX currently carries a Zacks Rank #3 (Hold), there are other stocks within the Business Services sector that may be worth considering:

  • Verisk Analytics (VRSK) has consistently beaten the Zacks Consensus Estimate, with an average surprise of 9.9% in the last four quarters. The consensus estimate for 2023 revenues suggests a slight decrease, but earnings are expected to rise by 14% compared to the previous year.
  • Automatic Data (ADP) has surpassed expectations in all four of its most recent quarters, with an average surprise of 3.1%. The consensus estimate for fiscal 2023 predicts revenue and earnings growth of 6.3% and 11.1%, respectively.
  • Broadridge (BR) has exceeded, met, or missed expectations in its past four quarters, with an average surprise of 0.5%. The consensus estimate for fiscal 2024 shows projected revenue and earnings growth of 7.2% and 8.8%, respectively.

It’s important to note that these stocks have shown strong potential but should be evaluated carefully before making any investment decisions.

In Summary

WEX’s impressive stock rise of 42% in the past year reflects its strong organic growth, bolstered by operational efficiency and strategic acquisitions. Analysts are optimistic about the company’s future prospects, with upward estimate revisions and a positive outlook. However, investors should also consider other opportunities within the Business Services sector, such as Verisk Analytics, Automatic Data, and Broadridge, as potential alternatives.

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