WEX trades at $167.17 per share and has stayed right on track with the overall market, gaining 8.1% over the last six months. At the same time, the S&P 500 has returned 11.6%.
Is now the time to buy WEX, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is WEX Not Exciting?
We're sitting this one out for now. Here are three reasons you should be careful with WEX and a stock we'd rather own.
1. Lackluster Revenue Growth
We at StockStory place the most emphasis on long-term growth, but within financials, a stretched historical view may miss recent interest rate changes, market returns, and industry trends. WEX’s recent performance shows its demand has slowed as its annualized revenue growth of 2.6% over the last two years was below its five-year trend. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
2. Recent EPS Growth Below Our Standards
While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.
WEX’s EPS grew at an unimpressive 5.2% compounded annual growth rate over the last two years. On the bright side, this performance was higher than its 2.6% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.
3. Previous Growth Initiatives Haven’t Impressed
Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.
Over the last five years, WEX has averaged an ROE of 10%, uninspiring for a company operating in a sector where the average shakes out around 10%.
Final Judgment
WEX isn’t a terrible business, but it doesn’t pass our quality test. That said, the stock currently trades at 10.5× forward P/E (or $167.17 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better stocks to buy right now. Let us point you toward one of our all-time favorite software stocks.
Stocks We Would Buy Instead of WEX
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