Wright Express Corp. (WXS) is a South Portland, Maine based payment processing and information management firm catering to corporate and government U.S. vehicle fleets. WXS tracks detailed transaction information for its customers' fleets. The company gathers its information by tracking 180,000 fuel and vehicle maintenance locations.
Formally a subsidiary of Cendant Corp., now Avis Budget Group (NASDAQ:CAR), WXS spun-off on February 15, 2005 and is now a constituent in the Clear Spin-Off Index [CLRSO], which is licensed for the EFT symbol (NYSEARCA:CSD). My firm publishes the index.
Collecting data from over 90% of the nation's retail fuel locations and 45,000 vehicle maintenance locations, WXS is able to provide its customers with information that includes the amount of the expenditure, the identification of the driver and vehicle, the odometer reading, the identity of the fuel or vehicle maintenance provider and the items purchased. This allows fleets in both the commercial and government sectors to manage their vehicles and personnel effectively and control costs. The company is able to provide these services by issuing corporate charge cards along with a back-end processing tool.
The company is also expanding its service and customer base. In the beginning of last month, it announced a strategic partnership with Networkcar, a provider of wireless vehicle management. The two firms are to provide remote vehicle maintenance diagnostics and GPS vehicle location information to their customers. In terms of customers, WXS has a large client base, including a new 10 year contract with previous customer, ExxonMobil Corporation (NYSE:XOM).
When analyzing its fundamental data, we can begin to see a clearer picture of the company's operations. With few true peers, I do not believe it is useful to provide peer group data on fundamentals for this firm. These numbers are strong for a firm in most any industry and were updated when the firm reported 02/7/07. Its operating margins are a solid 54.43%, while its gross margin is 89.47%. The company also provided a strong 48.81% return on equity [ROE] for its shareholders this year. Growth is also a factor in its success, with a 9.80 year over year quarterly revenue growth.
As for valuation we want to provide some comparisons and choose the closest comp of the information and delivery services industry. WXS has a trailing twelve month price to earnings (P/E) ratio of 15.67, below the average of 19.81. It also has a price to book (P/B) value of 6.37, beating the 27.41 average for the same group. The combination of these data points standing alone, or compared to the information and delivery services industry, has led us to conclude that WXS is a great asset to the Clear Spin-Off ETF [CSD], with the potential to yield great returns.
Disclosure: Wright Express Corp. [WXS], is a constituent in the Clear Spin-Off index licensed for the Claymore/Clear Spin-Off ETF [AMEX:CSD]. Mr. Corn is CEO and founder of Clear Indexes LLC which publishes the index and he owns shares of the ETF: CSD. He does not directly own shares in [WXS].
WXS 1-yr chart