Why WageWorks' Shares Jumped

Why WageWorks' Shares Jumped

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 WageWorks jumped 18% today after the company released earnings.

So what: Second-quarter revenue rose 25% to $54.6 million and net income rose 69% to $4.0 million, or $0.11 per share. On an adjusted basis, earnings were $0.20 per share, $0.03 ahead of estimates.

Now what: Management was positive on future growth given the coming health insurance exchanges, which will provide new opportunities. It's also a positive sign that the company has beaten estimates for each of the last four quarters, usually an indication that estimates will be low in the future, too. But with shares trading at 91 times earnings, the stock is too expensive today, even with a 25% top-line growth rate.

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The article Why WageWorks' Shares Jumped originally appeared on Fool.com.

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