It has been about a month since the last earnings report for Wex (WEX). Shares have lost about 2.6% 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 catalysts.
WEX Q2 Earnings Beat Estimates
WEX reported impressive second-quarter 2025 results, wherein both earnings and revenues beat the Zacks Consensus Estimate.
Quarterly adjusted earnings of $3.95 per share surpassed the Zacks Consensus Estimate by 7.1% and increased 1.02% from the year-ago quarter. Revenues of $659.6 million beat the consensus estimate by 0.9% but declined 2.06% on a year-over-year basis.
Segmental Revenues of WEX
The Mobility segment’s revenues decreased 3.7% from the year-ago quarter to $346.2 million, missing our estimate of $354.4 million. The Corporate Payments segment’s revenues were $118.3 million, down 34.2% from the second quarter of 2024, and missed our estimate of $119 million.
The Benefits segment’s revenues increased 45.5% year over year to $195.1 million, beating our estimate of $185.5 million.
WEX's Operating Results
Adjusted operating income declined 11.3% to $243 million from the year-ago quarter but beat our estimate of $223.2 million. The adjusted operating income margin of 36.8% outpaced our estimate of 33.9% but declined 390 basis points year over year.
Balance Sheet & Cash Flow of WEX
WEX exited the quarter with cash and cash equivalents of $772.6 million compared with $595.8 million in the December-end quarter of 2024. The long-term debt was $3.9 billion compared with $595.8 million in the December-end quarter of 2024.
The company used $264.6 million in cash from operating activities in the quarter. The adjusted free cash flow was $194.3 million. Capital expenditure totaled $34.6 million.
WEX's Q3 & 2025 Outlook
For the third quarter of 2025, revenues are expected to be between $669 million and $689 million. Adjusted net income is now expected between $4.30 and $4.50 per share.
For 2025, revenues are expected to be between $2.61 billion and $2.65 billion. Adjusted net income is now expected between $15.37 and $15.77 per share.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 5.56% due to these changes.
VGM Scores
At this time, Wex has a average Growth Score of C, a grade with the same score on the momentum front. However, the stock has a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Wex has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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WEX Inc. (WEX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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