Intrinsic value of WEX - WEX

Previous Close

$104.37

  Intrinsic Value

$516.73

stock screener

  Rating & Target

str. buy

+395%

  Value-price divergence*

+499%

Previous close

$104.37

 
Intrinsic value

$516.73

 
Up/down potential

+395%

 
Rating

str. buy

 
Value-price divergence*

+499%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of WEX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 4.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  19.06
  41.30
  37.67
  34.40
  31.46
  28.82
  26.43
  24.29
  22.36
  20.63
  19.06
  17.66
  16.39
  15.25
  14.23
  13.30
  12.47
  11.73
  11.05
  10.45
  9.90
  9.41
  8.97
  8.57
  8.22
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
Revenue, $m
  1,018
  1,438
  1,980
  2,662
  3,499
  4,507
  5,699
  7,083
  8,667
  10,455
  12,448
  14,645
  17,046
  19,646
  22,441
  25,427
  28,598
  31,952
  35,484
  39,191
  43,073
  47,127
  51,355
  55,759
  60,341
  65,105
  70,057
  75,203
  80,550
  86,108
  91,886
Variable operating expenses, $m
 
  977
  1,276
  1,652
  2,113
  2,669
  3,326
  4,090
  4,963
  5,949
  7,048
  8,076
  9,400
  10,834
  12,375
  14,021
  15,771
  17,620
  19,567
  21,612
  23,752
  25,988
  28,320
  30,748
  33,275
  35,902
  38,633
  41,471
  44,419
  47,484
  50,670
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  823
  977
  1,276
  1,652
  2,113
  2,669
  3,326
  4,090
  4,963
  5,949
  7,048
  8,076
  9,400
  10,834
  12,375
  14,021
  15,771
  17,620
  19,567
  21,612
  23,752
  25,988
  28,320
  30,748
  33,275
  35,902
  38,633
  41,471
  44,419
  47,484
  50,670
Operating income, $m
  195
  461
  704
  1,010
  1,386
  1,838
  2,372
  2,993
  3,704
  4,506
  5,400
  6,569
  7,646
  8,812
  10,066
  11,405
  12,828
  14,332
  15,916
  17,579
  19,320
  21,139
  23,035
  25,011
  27,066
  29,203
  31,424
  33,732
  36,131
  38,624
  41,215
EBITDA, $m
  337
  727
  1,001
  1,346
  1,769
  2,279
  2,881
  3,581
  4,381
  5,285
  6,293
  7,404
  8,617
  9,932
  11,345
  12,854
  14,458
  16,153
  17,938
  19,813
  21,775
  23,825
  25,962
  28,188
  30,505
  32,913
  35,416
  38,018
  40,721
  43,531
  46,452
Interest expense (income), $m
  116
  150
  277
  440
  645
  898
  1,201
  1,560
  1,977
  2,454
  2,992
  3,592
  4,254
  4,977
  5,760
  6,602
  7,501
  8,456
  9,466
  10,530
  11,646
  12,815
  14,036
  15,309
  16,635
  18,015
  19,450
  20,941
  22,491
  24,101
  25,775
Earnings before tax, $m
  87
  311
  427
  570
  740
  940
  1,171
  1,433
  1,727
  2,052
  2,407
  2,977
  3,392
  3,835
  4,306
  4,803
  5,327
  5,876
  6,450
  7,050
  7,674
  8,324
  8,999
  9,701
  10,431
  11,188
  11,974
  12,791
  13,640
  14,523
  15,441
Tax expense, $m
  30
  84
  115
  154
  200
  254
  316
  387
  466
  554
  650
  804
  916
  1,035
  1,163
  1,297
  1,438
  1,586
  1,742
  1,903
  2,072
  2,247
  2,430
  2,619
  2,816
  3,021
  3,233
  3,454
  3,683
  3,921
  4,169
Net income, $m
  61
  227
  312
  416
  540
  686
  855
  1,046
  1,261
  1,498
  1,757
  2,173
  2,476
  2,800
  3,143
  3,506
  3,889
  4,289
  4,709
  5,146
  5,602
  6,076
  6,570
  7,082
  7,614
  8,167
  8,741
  9,338
  9,957
  10,602
  11,272

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  191
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  5,997
  8,220
  11,316
  15,209
  19,994
  25,756
  32,564
  40,474
  49,525
  59,741
  71,129
  83,688
  97,406
  112,263
  128,234
  145,295
  163,419
  182,582
  202,764
  223,950
  246,129
  269,298
  293,459
  318,622
  344,804
  372,028
  400,324
  429,730
  460,287
  492,046
  525,061
Adjusted assets (=assets-cash), $m
  5,806
  8,220
  11,316
  15,209
  19,994
  25,756
  32,564
  40,474
  49,525
  59,741
  71,129
  83,688
  97,406
  112,263
  128,234
  145,295
  163,419
  182,582
  202,764
  223,950
  246,129
  269,298
  293,459
  318,622
  344,804
  372,028
  400,324
  429,730
  460,287
  492,046
  525,061
Revenue / Adjusted assets
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
Average production assets, $m
  1,022
  1,443
  1,986
  2,670
  3,509
  4,521
  5,716
  7,104
  8,693
  10,486
  12,485
  14,689
  17,097
  19,705
  22,508
  25,503
  28,684
  32,048
  35,590
  39,309
  43,202
  47,268
  51,509
  55,926
  60,522
  65,300
  70,267
  75,428
  80,792
  86,366
  92,161
Working capital, $m
  0
  -144
  -198
  -266
  -350
  -451
  -570
  -708
  -867
  -1,045
  -1,245
  -1,465
  -1,705
  -1,965
  -2,244
  -2,543
  -2,860
  -3,195
  -3,548
  -3,919
  -4,307
  -4,713
  -5,136
  -5,576
  -6,034
  -6,510
  -7,006
  -7,520
  -8,055
  -8,611
  -9,189
Total debt, $m
  2,205
  4,075
  6,475
  9,492
  13,200
  17,666
  22,942
  29,073
  36,087
  44,004
  52,830
  62,564
  73,195
  84,709
  97,086
  110,308
  124,354
  139,206
  154,847
  171,266
  188,455
  206,411
  225,136
  244,637
  264,928
  286,027
  307,956
  330,745
  354,427
  379,040
  404,627
Total liabilities, $m
  4,500
  6,370
  8,770
  11,787
  15,495
  19,961
  25,237
  31,368
  38,382
  46,299
  55,125
  64,859
  75,490
  87,004
  99,381
  112,603
  126,649
  141,501
  157,142
  173,561
  190,750
  208,706
  227,431
  246,932
  267,223
  288,322
  310,251
  333,040
  356,722
  381,335
  406,922
Total equity, $m
  1,497
  1,849
  2,546
  3,422
  4,499
  5,795
  7,327
  9,107
  11,143
  13,442
  16,004
  18,830
  21,916
  25,259
  28,853
  32,691
  36,769
  41,081
  45,622
  50,389
  55,379
  60,592
  66,028
  71,690
  77,581
  83,706
  90,073
  96,689
  103,565
  110,710
  118,139
Total liabilities and equity, $m
  5,997
  8,219
  11,316
  15,209
  19,994
  25,756
  32,564
  40,475
  49,525
  59,741
  71,129
  83,689
  97,406
  112,263
  128,234
  145,294
  163,418
  182,582
  202,764
  223,950
  246,129
  269,298
  293,459
  318,622
  344,804
  372,028
  400,324
  429,729
  460,287
  492,045
  525,061
Debt-to-equity ratio
  1.473
  2.200
  2.540
  2.770
  2.930
  3.050
  3.130
  3.190
  3.240
  3.270
  3.300
  3.320
  3.340
  3.350
  3.360
  3.370
  3.380
  3.390
  3.390
  3.400
  3.400
  3.410
  3.410
  3.410
  3.410
  3.420
  3.420
  3.420
  3.420
  3.420
  3.430
Adjusted equity ratio
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  61
  227
  312
  416
  540
  686
  855
  1,046
  1,261
  1,498
  1,757
  2,173
  2,476
  2,800
  3,143
  3,506
  3,889
  4,289
  4,709
  5,146
  5,602
  6,076
  6,570
  7,082
  7,614
  8,167
  8,741
  9,338
  9,957
  10,602
  11,272
Depreciation, amort., depletion, $m
  142
  266
  297
  335
  383
  441
  509
  587
  678
  780
  893
  835
  971
  1,120
  1,279
  1,449
  1,630
  1,821
  2,022
  2,233
  2,455
  2,686
  2,927
  3,178
  3,439
  3,710
  3,992
  4,286
  4,590
  4,907
  5,236
Funds from operations, $m
  -593
  493
  609
  751
  924
  1,127
  1,363
  1,634
  1,938
  2,277
  2,651
  3,008
  3,447
  3,919
  4,422
  4,955
  5,518
  6,110
  6,731
  7,380
  8,057
  8,762
  9,496
  10,260
  11,053
  11,877
  12,734
  13,623
  14,548
  15,509
  16,508
Change in working capital, $m
  -442
  -42
  -54
  -68
  -84
  -101
  -119
  -138
  -158
  -179
  -199
  -220
  -240
  -260
  -280
  -299
  -317
  -335
  -353
  -371
  -388
  -405
  -423
  -440
  -458
  -476
  -495
  -515
  -535
  -556
  -578
Cash from operations, $m
  -151
  535
  663
  820
  1,007
  1,228
  1,483
  1,772
  2,097
  2,456
  2,850
  3,227
  3,687
  4,179
  4,702
  5,254
  5,835
  6,446
  7,084
  7,750
  8,445
  9,168
  9,919
  10,700
  11,511
  12,354
  13,229
  14,138
  15,082
  16,065
  17,086
Maintenance CAPEX, $m
  0
  -58
  -82
  -113
  -152
  -199
  -257
  -325
  -404
  -494
  -596
  -709
  -835
  -971
  -1,120
  -1,279
  -1,449
  -1,630
  -1,821
  -2,022
  -2,233
  -2,455
  -2,686
  -2,927
  -3,178
  -3,439
  -3,710
  -3,992
  -4,286
  -4,590
  -4,907
New CAPEX, $m
  -66
  -421
  -543
  -683
  -840
  -1,011
  -1,195
  -1,388
  -1,589
  -1,793
  -1,999
  -2,204
  -2,408
  -2,608
  -2,803
  -2,995
  -3,181
  -3,364
  -3,542
  -3,719
  -3,893
  -4,067
  -4,241
  -4,417
  -4,596
  -4,779
  -4,967
  -5,161
  -5,364
  -5,574
  -5,795
Cash from investing activities, $m
  -1,160
  -479
  -625
  -796
  -992
  -1,210
  -1,452
  -1,713
  -1,993
  -2,287
  -2,595
  -2,913
  -3,243
  -3,579
  -3,923
  -4,274
  -4,630
  -4,994
  -5,363
  -5,741
  -6,126
  -6,522
  -6,927
  -7,344
  -7,774
  -8,218
  -8,677
  -9,153
  -9,650
  -10,164
  -10,702
Free cash flow, $m
  -1,311
  56
  37
  23
  16
  17
  31
  59
  104
  169
  255
  314
  445
  600
  779
  980
  1,205
  1,452
  1,721
  2,010
  2,318
  2,646
  2,993
  3,357
  3,738
  4,136
  4,552
  4,984
  5,433
  5,900
  6,384
Issuance/(repayment) of debt, $m
  969
  1,870
  2,400
  3,017
  3,708
  4,465
  5,277
  6,130
  7,015
  7,917
  8,826
  9,733
  10,631
  11,514
  12,378
  13,222
  14,046
  14,852
  15,641
  16,419
  17,189
  17,956
  18,725
  19,502
  20,291
  21,099
  21,930
  22,789
  23,682
  24,613
  25,587
Issuance/(repurchase) of shares, $m
  -2
  316
  385
  460
  536
  610
  677
  734
  776
  801
  805
  653
  611
  543
  450
  332
  189
  22
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,216
  2,186
  2,785
  3,477
  4,244
  5,075
  5,954
  6,864
  7,791
  8,718
  9,631
  10,386
  11,242
  12,057
  12,828
  13,554
  14,235
  14,874
  15,641
  16,419
  17,189
  17,956
  18,725
  19,502
  20,291
  21,099
  21,930
  22,789
  23,682
  24,613
  25,587
Total cash flow (excl. dividends), $m
  -89
  2,242
  2,822
  3,500
  4,261
  5,092
  5,984
  6,923
  7,895
  8,887
  9,886
  10,700
  11,687
  12,657
  13,607
  14,535
  15,441
  16,326
  17,362
  18,429
  19,507
  20,602
  21,717
  22,858
  24,029
  25,235
  26,481
  27,773
  29,115
  30,513
  31,970
Retained Cash Flow (-), $m
  -414
  -543
  -697
  -876
  -1,077
  -1,296
  -1,532
  -1,780
  -2,036
  -2,298
  -2,562
  -2,826
  -3,086
  -3,343
  -3,594
  -3,839
  -4,078
  -4,312
  -4,541
  -4,767
  -4,990
  -5,213
  -5,436
  -5,662
  -5,891
  -6,125
  -6,367
  -6,616
  -6,875
  -7,146
  -7,428
Prev. year cash balance distribution, $m
 
  191
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,890
  2,125
  2,625
  3,184
  3,796
  4,452
  5,143
  5,858
  6,588
  7,324
  7,874
  8,600
  9,314
  10,013
  10,696
  11,363
  12,014
  12,821
  13,662
  14,517
  15,389
  16,281
  17,196
  18,138
  19,110
  20,115
  21,157
  22,240
  23,367
  24,542
Discount rate, %
 
  8.90
  9.35
  9.81
  10.30
  10.82
  11.36
  11.93
  12.52
  13.15
  13.81
  14.50
  15.22
  15.98
  16.78
  17.62
  18.50
  19.43
  20.40
  21.42
  22.49
  23.61
  24.80
  26.03
  27.34
  28.70
  30.14
  31.65
  33.23
  34.89
  36.63
PV of cash for distribution, $m
 
  1,735
  1,777
  1,982
  2,151
  2,271
  2,335
  2,337
  2,279
  2,167
  2,009
  1,776
  1,571
  1,355
  1,141
  937
  751
  587
  454
  342
  251
  179
  125
  84
  55
  35
  21
  13
  7
  4
  2
Current shareholders' claim on cash, %
  100
  92.3
  86.1
  81.0
  76.8
  73.4
  70.5
  68.2
  66.2
  64.6
  63.3
  62.4
  61.7
  61.2
  60.8
  60.6
  60.5
  60.5
  60.5
  60.5
  60.5
  60.5
  60.5
  60.5
  60.5
  60.5
  60.5
  60.5
  60.5
  60.5
  60.5

WEX Inc. provides corporate card payment solutions in North and South America, the Asia Pacific, and Europe. The company’s Fleet Payment Solutions segment offers fleet vehicle payment and transaction processing services. Its services include customer, account activation, and account retention services; authorization and billing inquiries, and account maintenance services; premium fleet services; credit and collections services; and merchant services. This segment markets its products directly to commercial and government vehicle fleet customers with small, medium, and large fleets, as well as with over-the-road and long haul fleets; and indirectly through co-branded and private label relationships. Its Travel and Corporate Solutions segment provides payment processing solutions for corporate payment and transaction monitoring needs. Its products include virtual cards that are used for transactions that require pre-authorization and where no card is presented; and prepaid and gift card products enables secure payment and financial management solutions with single card options, access to open or closed loop redemption, load limits, and with various expirations. This segment markets its products directly to commercial and government organizations. The company’s Health and Employee Benefit Solutions segment provides healthcare payment products and SaaS consumer directed platforms for healthcare payments markets, as well as payroll related benefits to customers in Brazil. Its products include 1Pay and 1Plan payment solution products, as well as ExchangePoint, 1Cloud, and 1Direct SaaS platforms; and employee benefit cards, private label, and processing services for use in the retail, government, and transportation sectors. The company was formerly known as Wright Express Corporation and changed its name to WEX Inc. in October 2012. WEX Inc. was founded in 1983 and is headquartered in South Portland, Maine.

FINANCIAL RATIOS  of  WEX (WEX)

Valuation Ratios
P/E Ratio 73.3
Price to Sales 4.4
Price to Book 3
Price to Tangible Book
Price to Cash Flow -29.6
Price to Free Cash Flow -20.6
Growth Rates
Sales Growth Rate 19.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4.8%
Cap. Spend. - 3 Yr. Gr. Rate 11.1%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 147.3%
Total Debt to Equity 147.3%
Interest Coverage 2
Management Effectiveness
Return On Assets 2.8%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 2%
Ret/ On T. Cap. - 3 Yr. Avg. 5.5%
Return On Equity 4.7%
Return On Equity - 3 Yr. Avg. 11.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 51.7%
Gross Margin - 3 Yr. Avg. 54%
EBITDA Margin 33.9%
EBITDA Margin - 3 Yr. Avg. 40.6%
Operating Margin 19.2%
Oper. Margin - 3 Yr. Avg. 27.8%
Pre-Tax Margin 8.5%
Pre-Tax Margin - 3 Yr. Avg. 22.4%
Net Profit Margin 6%
Net Profit Margin - 3 Yr. Avg. 14.2%
Effective Tax Rate 34.5%
Eff/ Tax Rate - 3 Yr. Avg. 36.3%
Payout Ratio 0%

WEX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WEX stock intrinsic value calculation we used $1018 million for the last fiscal year's total revenue generated by WEX. The default revenue input number comes from 2016 income statement of WEX. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our WEX stock valuation model: a) initial revenue growth rate of 41.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.9%, whose default value for WEX is calculated based on our internal credit rating of WEX, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of WEX.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of WEX stock the variable cost ratio is equal to 73.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for WEX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.8% for WEX.

Corporate tax rate of 27% is the nominal tax rate for WEX. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the WEX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for WEX are equal to 100.3%.

Life of production assets of 17.6 years is the average useful life of capital assets used in WEX operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for WEX is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1497 million for WEX - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 41.43 million for WEX is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of WEX at the current share price and the inputted number of shares is $4.3 billion.

RELATED COMPANIES Price Int.Val. Rating
V VISA Cl A 104.07 136.73  buy
MA Mastercard 133.80 122.89  hold
FLT FleetCor Techn 142.31 311.69  str.buy
FIS Fidelity Natio 91.58 64.61  sell
GPN Global Payment 95.85 34.97  str.sell
VNTV Vantiv 72.51 71.45  hold
CASS Cass Informati 63.28 76.72  hold

COMPANY NEWS

▶ Insiders Roundup: Facebook, PRA Health Sciences   [Aug-18-17 04:09PM  GuruFocus.com]
▶ ETFs with exposure to WEX, Inc. : August 8, 2017   [Aug-08-17 05:27PM  Capital Cube]
▶ Wex tops Street 2Q forecasts   [Jul-27-17 02:56PM  Associated Press]
▶ 7 of the Worst-Performing Stocks in Gurus' Portfolios   [Jul-07-17 05:44PM  GuruFocus.com]
▶ WEX Inc. Completes Successful Term Loan Repricing   [Jul-03-17 11:31AM  Business Wire]
▶ ETFs with exposure to WEX, Inc. : June 28, 2017   [Jun-28-17 03:09PM  Capital Cube]
▶ WEX Survey Reveals CFOs Thoughts on Future of Payments   [Jun-22-17 06:45AM  Business Wire]
▶ WEX Inc. and GasBuddy Form Strategic Alliance   [Jun-14-17 07:30AM  Business Wire]
▶ WEX Inc. Announces Plans for Potential Debt Repricing   [Jun-12-17 06:30AM  Business Wire]
▶ WEX Named Great Place to Work   [Jun-08-17 07:30AM  Business Wire]
▶ EFS Launches New Mobile Technology for Drivers   [Jun-06-17 07:00AM  Business Wire]
▶ WEX Motopass Fuel Card launches new Online Service Centre   [May-17-17 04:45PM  Business Wire]
▶ WEX, Inc. Value Analysis (NYSE:WEX) : April 27, 2017   [Apr-27-17 05:22PM  Capital Cube]
▶ Wex beats Street 1Q forecasts   [07:52AM  Associated Press]
▶ EFS Expands Relationship with Pilot Flying J   [06:50AM  Business Wire]
▶ Knight Transportation Extends Relationship with EFS   [Apr-04-17 07:30AM  Business Wire]
▶ WEX Expands Asian Virtual Payments Solution to Singapore   [Apr-02-17 04:30PM  Business Wire]
▶ WEX Health Strengthens Position as an Industry Leader   [Mar-23-17 04:20PM  Business Wire]
▶ Hedge Funds Arent Crazy About WEX Inc (WEX) Anymore   [Dec-14-16 04:00AM  at Insider Monkey]
▶ David Cooper Joins WEX as Chief Technology Officer   [Dec-13-16 05:00PM  Business Wire]
▶ Hedge Funds Are Buying NCR Corporation (NCR)   [Dec-01-16 09:37AM  at Insider Monkey]
Financial statements of WEX
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.