WEX (WEX) vs. Mastercard (MA) Critical Analysis

WEX (NYSE:WEX) and Mastercard (NYSE:MA) are both business services companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitability, institutional ownership, dividends and analyst recommendations.

Analyst Ratings

This is a summary of recent ratings and recommmendations for WEX and Mastercard, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WEX 0 3 10 0 2.77
Mastercard 0 2 22 1 2.96

WEX currently has a consensus target price of $192.09, suggesting a potential upside of 11.66%. Mastercard has a consensus target price of $227.24, suggesting a potential upside of 3.04%. Given WEX’s higher probable upside, equities research analysts clearly believe WEX is more favorable than Mastercard.

Profitability

This table compares WEX and Mastercard’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
WEX 15.63% 16.92% 4.37%
Mastercard 39.19% 122.25% 29.02%

Valuation & Earnings

This table compares WEX and Mastercard’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
WEX $1.25 billion 5.93 $160.26 million $4.70 36.60
Mastercard $14.95 billion 15.24 $5.86 billion $6.49 33.98

Mastercard has higher revenue and earnings than WEX. Mastercard is trading at a lower price-to-earnings ratio than WEX, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

WEX has a beta of 1.55, meaning that its stock price is 55% more volatile than the S&P 500. Comparatively, Mastercard has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Dividends

Mastercard pays an annual dividend of $1.32 per share and has a dividend yield of 0.6%. WEX does not pay a dividend. Mastercard pays out 20.3% of its earnings in the form of a dividend. Mastercard has raised its dividend for 7 consecutive years.

Institutional and Insider Ownership

97.2% of WEX shares are owned by institutional investors. Comparatively, 81.3% of Mastercard shares are owned by institutional investors. 4.6% of WEX shares are owned by company insiders. Comparatively, 0.3% of Mastercard shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Mastercard beats WEX on 12 of the 18 factors compared between the two stocks.

WEX Company Profile

WEX Inc. provides corporate card payment solutions in North and South America, the Asia Pacific, and Europe. It operates through three segments: Fleet Solutions, Travel and Corporate Solutions, and Health and Employee Benefit Solutions. The Fleet Solutions segment offers fleet vehicle payment and processing services. Its services include customer, account activation, and account retention services; authorization and billing inquiries, and account maintenance services; premium fleet services; credit and collections services; and merchant services. This segment markets its products directly to commercial and government vehicle fleet customers with small, medium, and large fleets, as well as with over-the-road and long haul fleets; and indirectly through co-branded and private label relationships. The Travel and Corporate Solutions segment provides payment processing solutions for corporate payment and transaction monitoring needs. Its products include virtual cards that are used for transactions where no card is presented and that require pre-authorization; and prepaid and gift card products that enables secure payment and financial management solutions with single card options, access to open or closed loop redemption, load limits, and with various expirations. This segment markets its products directly to commercial and government organizations. The Health and Employee Benefit Solutions segment offers healthcare payment products and software-as-a-service consumer directed platforms for healthcare market, as well as payroll related and employee benefit products in Brazil. The company was formerly known as Wright Express Corporation and changed its name to WEX Inc. in October 2012. WEX Inc. was founded in 1983 and is headquartered in South Portland, Maine.

Mastercard Company Profile

Mastercard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. It facilitates the processing of payment transactions, including authorization, clearing, and settlement, as well as delivers related products and services. The company also offers value-added services, such as safety and security products, loyalty and reward programs, information and consulting services, issuer and acquirer processing solutions, and payment and mobile gateways. In addition, it provides various integrated products and services for account holders, merchants, financial institutions, businesses, governments, and other organizations; programs that enable issuers to provide consumers with cards to defer payments; payment products and solutions that allow its customers to access funds in deposit and other accounts; prepaid payment programs and management services; and commercial payment products and solutions. Further, the company provides products and services to prevent, detect, and respond to fraud and cyber-attacks, and ensure the safety of transactions. It offers payment solutions and services under the MasterCard, Maestro, and Cirrus brands. Mastercard Incorporated has a strategic partnership with Bahrain Commercial Facilities Company BSC; and strategic agreement with Wirecard AG. The company was founded in 1966 and is headquartered in Purchase, New York.

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