Although WEX (currently trading at $146.53 per share) has gained 7.3% over the last six months, it has trailed the S&P 500’s 14.1% return during that period. This might have investors contemplating their next move.

Is there a buying opportunity in WEX, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free for active Edge members.

Why Is WEX Not Exciting?

We don't have much confidence in WEX. Here are two reasons we avoid WEX and a stock we'd rather own.

1. Lackluster Revenue Growth

We at StockStory place the most emphasis on long-term growth, but within financials, a stretched 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 2.4% 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.

2. Recent EPS Growth Below Our Standards

While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.

WEX’s weak 4% annual EPS growth over the last two years aligns with its revenue trend. On the bright side, this tells us its incremental sales were profitable.

Final Judgment

WEX isn’t a terrible business, but it doesn’t pass our bar. With its shares underperforming the market lately, the stock trades at 8.5× forward P/E (or $146.53 per share). While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're fairly confident there are better stocks to buy right now. We’d recommend looking at the Amazon and PayPal of Latin America.

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