PORTLAND, Maine - WEX Inc. (NYSE:WEX), a global commerce platform, has entered into an accelerated share repurchase (ASR) agreement with JPMorgan Chase (NYSE:JPM) Bank, National Association, to buy back $300 million of its common stock. This transaction is part of a broader $1.05 billion share repurchase authorization, which WEX announced in February 2024.
Under the terms of the ASR, WEX will pay JPMorgan $300 million upfront and initially receive around 1.3 million shares based on the July 26, 2024, closing price of $180.44 per share. This initial share count represents about 80% of the expected total repurchase volume under the ASR.
The final number of shares WEX will buy back will depend on the average daily volume-weighted prices during the ASR term, with adjustments for a negotiated discount and other terms of the agreement. The ASR is scheduled for completion in the fourth quarter of 2024, although it may conclude sooner at JPMorgan's discretion.
Melissa Smith, WEX's Chair, CEO, and President, expressed confidence in the company's intrinsic value and growth potential, which she attributed to WEX's robust revenue and earnings growth trajectory and anticipated future cash generation. Smith reaffirmed WEX's commitment to a capital allocation strategy that balances investment in growth with shareholder returns via strategic share repurchases.
As of July 19, 2024, WEX had about 41.1 million common shares outstanding. The company operates a commerce platform aimed at simplifying business operations, providing personalized solutions and leveraging data and expertise in various business areas.
In other recent news, WEX Inc. reported an 8% increase in Q2 2024 revenue, reaching $673 million, and a 9% rise in total volume to $60 billion. Despite these positive results, the company adjusted its full-year revenue outlook downward due to softer volume trends in its travel business.
Mizuho Securities revised WEX's stock price target to $206, down from $235, citing lower-than-expected fuel prices and shifts in volume from Booking (NASDAQ:BKNG).com as key factors. However, Mizuho maintains a positive outlook on WEX, highlighting the company's focus on new revenue opportunities, including cross-selling new products from its recent acquisition of Payzer.
WEX also announced plans to buy back an additional $300 million of its common stock, indicating confidence in its financial position. The company's Q2 results also revealed an 8% YoY increase in adjusted net income per diluted share to $3.91.
WEX is making strides in the electric vehicle market and leveraging AI for operational efficiency, while also reporting strong growth in its mobility and benefits segments.
Looking ahead, WEX expects Q3 revenue to fall between $688 million and $698 million, and forecasts full-year revenue to range from $2.68 billion to $2.72 billion. CEO Melissa Smith and CFO Jagtar Narula indicated that the company is considering geographic and product expansion through mergers and acquisitions, focusing on smaller scale players while maintaining financial discipline.
InvestingPro Insights
As WEX Inc. (NYSE:WEX) embarks on its ambitious $300 million accelerated share repurchase (ASR) program, the company's financial health and market performance come into sharp focus. According to InvestingPro insights, WEX is currently trading at a high earnings multiple with a P/E ratio of 31.31, suggesting that investors are anticipating higher earnings in the future. This aligns with the InvestingPro tip that WEX's net income is expected to grow this year.
The company's market capitalization stands at $7.41 billion, reflecting its significant presence in the global commerce platform space. Despite a recent drop in stock price over the last three months by 17.49%, analysts predict the company will be profitable this year, which could signal a potential rebound opportunity for investors. WEX's commitment to returning value to shareholders is further evidenced by its robust revenue growth of 7.0% over the last twelve months as of Q2 2024 and a solid operating income margin of 25.83%.
For investors seeking more comprehensive analysis and additional InvestingPro Tips, there are 9 more tips available on the InvestingPro product for WEX, which can be accessed at https://www.investing.com/pro/WEX. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further insights into WEX's financial performance and market position.
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