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WEX Inc. (WEX) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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WEX Inc. (WEX)

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Intrinsic Value (DCF)

Current$160.57
→
Intrinsic$110.67
-31%
$45.85$110.67$233.80
Market implies 22% growth for 5 years
Current price reflects execution expectations above 16% growth — not unreasonable for quality businesses.
At $161, the market prices in continued strong cash flow growth (22%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $46 → Bull $234. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →12%14%16%18%
8%$153$174$197$221
10%$81$95$111$127
12%$41$51$63$75
14%$15$24$33$42

Bull Case

  • Bull case ($234) offers 46% upside at 19% growth, 9% discount

Bear Case

  • Bear case ($46) implies 71% downside at 13% growth, 12% discount
  • Price reflects 22% growth expectations vs 16% historical — high bar to clear
  • Trading 31% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$388.01M
Year 2$450.62M
Year 3$523.33M
Year 4$607.77M
Year 5$705.84M
Terminal$10.39B

📐 Model Inputs

Growth Rate16.1%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$334.10MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is WEX stock undervalued or overvalued?
🔴 OVERVALUED

WEX trades at $160.57 vs. our DCF-derived intrinsic value of $110.67, implying -27% downside. Using a 10.0% WACC and 16.1% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($205.24) suggests limited upside.

What is WEX's intrinsic value?

Using a 5-year DCF model: Base FCF of $334M, projected at 16.1% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $3.85B net debt and dividing by 0.04B shares: Bear $44.62 | Base $110.67 | Bull $205.24. Current price $160.57 implies -27% to base case.

How is WEX's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 16.1% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($8.42B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 25.2x.