WEX (WXS) and Newtek Business Services Corp. (NEWT) Critical Review
WEX (NYSE: WXS) and Newtek Business Services Corp. (NASDAQ:NEWT) are both industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.
This table compares WEX and Newtek Business Services Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Newtek Business Services Corp.||81.35%||7.97%||4.23%|
Insider and Institutional Ownership
22.8% of Newtek Business Services Corp. shares are held by institutional investors. 6.7% of Newtek Business Services Corp. shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This is a summary of recent recommendations and price targets for WEX and Newtek Business Services Corp., as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Newtek Business Services Corp.||0||2||1||0||2.33|
Newtek Business Services Corp. has a consensus price target of $17.00, indicating a potential downside of 1.28%. Given Newtek Business Services Corp.’s higher possible upside, analysts clearly believe Newtek Business Services Corp. is more favorable than WEX.
Earnings & Valuation
This table compares WEX and Newtek Business Services Corp.’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Newtek Business Services Corp.||$35.85 million||8.38||$2.91 million||$1.88||9.16|
Newtek Business Services Corp. has higher revenue and earnings than WEX.
Newtek Business Services Corp. pays an annual dividend of $1.60 per share and has a dividend yield of 9.3%. WEX does not pay a dividend. Newtek Business Services Corp. pays out 85.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Newtek Business Services Corp. beats WEX on 9 of the 10 factors compared between the two stocks.
WEX Inc. is a provider of corporate payment solutions. The Company operates through three segments: Fleet Solutions, Travel and Corporate Solutions, and Health and Employee Benefit Solutions. The Fleet Solutions segment provides customers with payment and transaction processing services designed for the needs of commercial and government fleets. The Travel and Corporate Solutions segment focuses on the complex payment environment of business-to-business payments, providing customers with payment processing solutions for their corporate payment and transaction monitoring needs. The Health and Employee Benefit Solutions segment provides healthcare payment products and software as a service consumer directed platforms, as well as payroll related benefits to customers in Brazil. The United States operations include the Company and its subsidiaries WEX Bank, WEX FleetOne, Electronic Funds Source LLC and WEX Health.
About Newtek Business Services Corp.
Newtek Business Services Corp. is an internally managed non-diversified closed-end management investment company. The Company’s investment objective is to generate both current income and capital appreciation primarily through loans originated by its small business finance platform and its equity investments in certain portfolio companies that it controls. The Company is a national non-bank lender that provides, together with its controlled portfolio companies, a range of business services and financial products under the Newtek brand to the small and medium-sized business (SMB) market. The Company issues debt and makes equity investments in portfolio companies in various industries. Its products and services include Business Lending including the United States Small Business Administration (SBA) 7(a) and 504 lending, Electronic Payment Processing, Managed Technology Solutions (Cloud Computing), Data Backup, and Payroll and Benefits Solutions to SMB accounts across all industries.
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