February 6, 2013
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 (NYSE: 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.
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