Why Is Wex (WEX) Up 15.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Wex (WEX). Shares have added about 15.4% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Wex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.
WEX Q2 Earnings Beat Estimates
WEX reported impressive second-quarter 2026 results, with earnings and revenues beating the respective Zacks Consensus Estimates.
WEX’s adjusted earnings (excluding $2.24 from non-recurring items) were $5.35 per share, which surpassed the Zacks Consensus Estimate by 5.3% and increased 35.4% year over year. Revenues were $753.5 million, topping the Consensus Estimate by 1.8% and rising 14.2% year over year.
Higher fuel prices, solid execution across the business and broad-based segment growth drove these positive results. Total volume across all segments increased 15.7% year over year to $68.9 billion, highlighting continued customer activity.
Segments Drive Revenue Growth
The Mobility segment remained WEX's largest contributor, generating $422.4 million in revenues, up 22.0% from the prior-year quarter. Management attributed much of the outperformance to higher U.S. fuel prices, while payment processing transactions edged up 0.1% to 139.3 million.
The Benefits segment generated $206.0 million in revenues, increasing 5.6% year over year. Average Software-as-a-Service accounts rose 2.2% to 21.7 million, while average HSA custodial cash assets climbed 11.1% to $5.2 billion.
Corporate Payments revenues increased 5.8% to $125.1 million. Purchase volume declined 3.6% to $19.8 billion, although total volume processed increased 4.5% to $38.6 billion.
Margin Expansion Supports Earnings Growth
GAAP net income increased to $3.11 per diluted share, up 57.1% year over year. Adjusted operating income margin expanded to 39.6% from 36.8% in the year-ago quarter, while GAAP operating margin improved to 27.0% from 23.8%.
Management noted that higher fuel prices contributed meaningfully to revenues and earnings outperformance. Excluding the impacts of fuel prices and foreign exchange, revenue grew 4.2%, while adjusted earnings per share increased 10.1%, reflecting solid underlying execution.
The company highlighted progress across its strategic initiatives, including AI-driven productivity improvements, pricing actions within Mobility and continued momentum in Corporate Payments and Benefits.
Cash Flow, Leverage Improve
WEX ended the quarter with a leverage ratio of 2.9X, improving from 3.1X at the end of the first quarter.
Net cash used in operating activities totaled $77.6 million, compared with $264.6 million in operating cash provided in the prior-year quarter, primarily reflecting higher receivable balances associated with elevated domestic fuel prices. Adjusted free cash flow improved to $219.0 million from $194.3 million a year earlier.
The company repurchased approximately $60 million of shares during the second quarter, with an additional $33 million repurchased through July 20. Management indicated that most of the adjusted free cash flow will be directed toward share repurchases in the near term.
WEX’s Q3 & Full Year 2026 Outlook
For the third quarter of 2026, WEX expects revenues to be in the range of $733 million to $753 million. Adjusted earnings are expected to be $5.45-$5.65 per diluted share.
The company raised its full-year 2026 guidance to $2.86 billion-$2.90 billion, up from the previous outlook of $2.82 billion-$2.88 billion.
Adjusted earnings are projected to be in the range of $19.68-$20.08 per diluted share, compared with the earlier forecast of $18.95-$19.55.
The updated guidance assumes average U.S. retail fuel prices of $3.91 per gallon for full-year 2026 and does not include any potential future impacts from European fuel spreads. Management said strong fuel prices, resilient demand across all three operating segments and disciplined capital allocation supported the improved outlook.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
VGM Scores
At this time, Wex has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock has a score of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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. Notably, Wex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
