Why WEX's Shares Dropped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of business payment processor WEX fell as much as 10% today after releasing earnings.

So what: Fourth-quarter revenue rose 21% to $169 million, ahead of estimates of $163.4 million. Earnings per share of $1.07 beat estimates by a penny, but investors were more interested in forward guidance than the earnings beat. The company is expecting to earn $0.89 to $0.96 per share next quarter, well below the estimate of $1.08, and that's why shares were moving lower today.  


Now what: When shares are trading at 29 times trailing earnings and revenue is growing at 21%, investors are expecting more than flat results on the bottom line. But that's about what management expects to do next quarter, and investors expect more. I like the top-line growth, but I'd like to see more bottom-line growth before jumping into this stock.

Interested in more info on WEX? Add it to your watchlist by clicking here.

The article Why WEX's Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDrawThe Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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