It has been about a month since the last earnings report for Wex (WEX). Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Wex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
WEX Misses Q4 Earnings Estimates
WEX reported mixed fourth-quarter 2020 results, with earnings missing the Zacks Consensus Estimate and revenues surpassing the same.
Adjusted earnings of $1.45 per share (excluded $6.75 from non-recurring items) missed the Zacks Consensus Estimate by 0.7% and declined 44.4% year over year. Total revenues of $399 million surpassed the consensus mark by 3.2% and declined 9.3% year over year. The downside was caused by lower average fuel prices and foreign exchange rates.
Revenues by Segment
Fleet Solutions revenues (59% of total revenues) declined 9.7% year over year to $235.4 million. The downside was primarily due to 25% plunge in finance fee revenue.
Average number of vehicles serviced was 15.8 million, up 6% from the year-ago quarter’s figure. Total fuel transactions processed fell 5% from the year-ago quarter’s tally to 147.7 million. Payment processing transactions were down 7% to 118.3 million. U.S. retail fuel price declined 19.3% to $2.26 per gallon.
Travel and Corporate Solutions revenues (18.7%) of $74.7 million were down 21.9% year over year. The downtick was caused by decline in revenues from travel-related customers. Purchase volume plunged 48% to $5 billion.
Health and Employee Benefit Solutions revenues (22.3%) of $88.9 million rose 6.3% year over year, on 13% growth in account servicing revenues and 4% growth in payment processing revenues. The average number of Software-as-a-Service (SaaS) accounts in the United States increased 8% year over year to 14.5 million.
Adjusted operating income fell 37.8% from the prior-year quarter’s figure to $115.1 million. Adjusted operating income margin declined to 28.8% from the year-ago quarter’s level 42%.
WEX exited the quarter with cash and cash equivalents of $852 million compared with $1.5 billion witnessed at the end of the prior quarter. Long-term debt was $2.9 billion, flat sequentially.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -19.94% due to these changes.
At this time, Wex has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Wex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.