WEX (WEX)

Payment solutions provider WEX (NYSE:WEX) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 5.7% year on year to $672.9 million. On the other hand, the company’s full-year revenue guidance of $2.73 billion at the midpoint came in 1% below analysts’ estimates. Its non-GAAP profit of $4.11 per share was 4.7% above analysts’ consensus estimates.

Company Overview

Originally founded in 1983 as Wright Express to serve the fleet card market, WEX (NYSE:WEX) provides payment processing and business solutions across fleet management, employee benefits, and corporate payments sectors.

Diversified financial services encompass specialized offerings outside traditional categories. These firms benefit from identifying niche market opportunities, developing tailored financial products, and often facing less direct competition. Challenges include scale limitations, regulatory classification uncertainties, and the need to continuously innovate to maintain market differentiation against larger competitors expanding their offerings.

In the Mobility segment, WEX competes with Fleetcor (NYSE:FLT), U.S. Bank Voyager, and international players like Radius Payment Solutions and Edenred. The Benefits segment faces competition from HealthEquity (NASDAQ:HQY), Alegeus Technologies, and Alight Technologies (NYSE:ALIT). In Corporate Payments, WEX competes with specialized fintech firms like Global Payments (NYSE:GPN), Marqeta (NASDAQ:MQ), and Stripe.

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, WEX’s 11.3% annualized revenue growth over the last five years was solid. Its growth beat the average financials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade 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 2.2% 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.

This quarter, WEX reported year-on-year revenue growth of 5.7%, and its $672.9 million of revenue exceeded Wall Street’s estimates by 1.2%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Diversified Financial Services companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

This is because for financials businesses, interest income and expense should be factored into the definition of profit but taxes - which are largely out of a company's control - should not.

Over the last five years, WEX’s pre-tax profit margin has fallen by 35.1 percentage points, going from 11% to 15.8%. It has also expanded by 1.3 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

WEX’s pre-tax profit margin came in at 16.3% this quarter. This result was 3.7 percentage points better than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

WEX’s EPS grew at a spectacular 21.7% compounded annual growth rate over the last five years, higher than its 11.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For WEX, its two-year annual EPS growth of 4.5% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q4, WEX reported adjusted EPS of $4.11, up from $3.57 in the same quarter last year. This print beat analysts’ estimates by 4.7%. Over the next 12 months, Wall Street expects WEX’s full-year EPS of $16.16 to grow 8.9%.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, WEX has averaged an ROE of 14.9%, healthy for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This is a bright spot for WEX.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

WEX currently has $4.86 billion of debt and $1.23 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 5.2×. We think this is dangerous - for a financials business, anything above 3.5× raises red flags.

It was good to see WEX beat analysts’ EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance slightly missed. Zooming out, we think this was a mixed quarter. The stock remained flat at $148.26 immediately after reporting.

Updated: February 4, 2026 at 4:52 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in WEX.

WEX isn’t a terrible business, but it isn’t one of our picks. Although its revenue growth was solid over the last five years, it’s expected to deteriorate over the next 12 months and its solid ROE suggests it has grown profitably in the past

WEX’s P/E ratio based on the next 12 months is 8.5x. This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $173.60 on the company (compared to the current share price of $148.26).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.