Trade-Ideas LLC identified

WEX

(

WEX

) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified WEX as such a stock due to the following factors:

  • WEX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.0 million.
  • WEX has traded 693,887 shares today.
  • WEX is up 3.1% today.
  • WEX was down 6% yesterday.

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More details on WEX:

WEX Inc. provides corporate card payment solutions in North and South America, the Asia Pacific, and Europe. It operates in two segments, Fleet Payment Solutions and Other Payment Solutions. The Fleet Payment Solutions segment offers fleet vehicle payment and transaction processing services. WEX has a PE ratio of 21. Currently there are 4 analysts that rate WEX a buy, 2 analysts rate it a sell, and 6 rate it a hold.

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The average volume for WEX has been 289,900 shares per day over the past 30 days. WEX has a market cap of $3.5 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.79 and a short float of 4.1% with 3.16 days to cover. Shares are down 14.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates WEX as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 26.8%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 39.16% is the gross profit margin for WEX INC which we consider to be strong. Regardless of WEX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 12.39% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the IT Services industry. The net income has significantly decreased by 38.9% when compared to the same quarter one year ago, falling from $43.33 million to $26.49 million.
  • The debt-to-equity ratio of 1.22 is relatively high when compared with the industry average, suggesting a need for better debt level management.

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