Wright Express Forays into Brazil - Analyst Blog

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Wright Express Corporation ( WXS ) announced the acquisition of 51% stake in UNIK S.A., for a consideration of US$21.9 million (R$44.7 million). UNIK S.A., is a privately-held payroll cards provider based in Brazil.

Per the purchase agreement, the company also has an option of buying the remaining 49% stake over the upcoming three years.

The acquisition is expected to bolster the adjusted net income in the first year itself.

The UNIK acquisition has not only strengthened Wright Express' global reach but also helped it foray into the Brazilian market, which being a promising economy offers attractive opportunities. Wright Express expects to combine UNIK's personnel and products to capitalize on the opportunities. The acquisition is expected to augur well for the company and help it set its foot in the fleet market, besides strengthening its payroll card presence.

On the flip side, combining Wright Express's with UNIK's product will help the latter widen its product offering.

Wright Express has been working on augmenting its fleet business and other payment solutions. Revenues from fleet payment solutions in the second quarter increased 1%, while it surged 39% from other payment solutions.

In order to augment its business and widen international presence, Wright Express has made acquisitions earlier as well. In May, it acquired CorporatePay for US $27.8 million (GBP 17 million). CorporatePay offers corporate prepaid solutions to the travel industry in the United Kingdom.

Wright Express delivered a very strong quarter, with both its top line and bottom line outperforming the company's guidance. Also, revenue and earnings per share surprised the Zacks Consensus Estimate by 3% and 3.1% respectively.

The company expects to generate revenue in the range of $591 million to $601 million and adjusted net income in the range of $156 million to $162 million, or $4.00 to $4.15 per diluted share in 2012. The Zacks Consensus Estimate for 2012 is currently pegged at $4.09, close to the mid point of the company's guidance. It also reflects a year-over-year increase of 12.4%.

Wright Express, provider of value-based, business payment processing and information management solutions currently holds a Zacks Rank #3 (Hold), indicating no clear directional pressure on the stock in the near term.

FleetCor Technologies, Inc. ( FLT ) and U.S. Bancorp ( USB ), which closely compete with Wright Express, hold a Zacks Rank #1 (Strong Buy) and a Zacks Rank #2 (Buy) respectively.

FLEETCOR TECH (FLT): Free Stock Analysis Report
US BANCORP (USB): Free Stock Analysis Report
WRIGHT EXPRESS (WXS): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: FLT , USB , WXS

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