WEX Inc. (WEX) stock intrinsic value fair value estimate & owner earnings analysis

WEX runs payment networks for businesses in three segments. Mobility ($1,386 million of 2025 revenue) supplies fuel cards to commercial fleets. It earns a share of each fuel purchase, account fees, and late fees on card balances funded through its own bank, WEX Bank. Benefits ($797 million) administers health savings accounts and other employee benefit accounts. It also earns interest on the HSA cash it holds as custodian, which averaged $4.75 billion in 2025 at a 4.98% yield. Corporate Payments ($477 million) issues virtual cards that businesses, many of them in travel, use to pay suppliers. About 88% of revenue is booked in the United States. How we measured earnings. We start from operating cash flow. Then we remove the swings in receivables and payables, subtract stock-based pay, charge the credit-loss provision as a cost, and deduct the capital spending needed to maintain the business. Fuel-card receivables move by hundreds of millions of dollars with fuel prices; in 2025 they absorbed $401 million of cash. Counting those swings would make any single year look unusually strong or unusually weak. Because we strip them out, we charge credit losses directly instead. We do not charge the roughly $192 million a year of amortization on acquired customer relationships. Revenue has held up while the company pays to win replacement customers through sales spending that is already expensed. We charge the long-term decline of the fuel business through the fading earnings in each case instead. Acquisitions, the $73 million of intangible assets bought in 2025, and payments of deferred and contingent acquisition consideration ($76.7 million in 2025) are treated as investments. They are not charged against yearly earnings. On that basis owner earnings were $365 million in 2018, $512 million in 2022, $564 million in 2023, $529 million in 2024 and $551 million in 2025. 2020 fell to $45 million because of the pandemic and a $162.5 million cash legal settlement, so we leave it out. Over 2024 and 2025 WEX spent $1.45 billion buying back shares, much of the 2025 amount with borrowed money. The diluted share count fell from 43.3 million in 2023 to 35.0 million in mid-2026. We therefore take the median of 2022 to 2025 owner earnings, $540 million, and spread it over today's share count. That gives a starting point of $15.43 per share. Recent trends are mixed. In 2025 owner earnings rose 4% in dollars (20% per share). Segment profit fell in Mobility ($598.5 million to $541.1 million), where lower fuel prices alone cut revenue by $27 million. It also fell in Corporate Payments ($256.2 million to $213.3 million) after a large travel customer renegotiated its contract in 2024. Benefits rose from $307.0 million to $341.6 million. In the first half of 2026, revenue rose from $1,296 million to $1,427 million and net income from $140 million to $186 million. Base case, $256.22 per share. Owner earnings grow 3.5% a year for five years, below 2025's actual per-share growth, and 2.5% for the next five. Benefits keeps growing (revenue rose from $668 million in 2023 to $797 million in 2025, and HSA cash grew 11% in 2025). Mobility price increases, such as account-servicing fees up 7% and a higher late-fee rate, offset flat-to-lower fuel volumes. The company itself says fleets are buying fewer gallons per customer as vehicles become more fuel efficient, a long-term trend. So earnings hold flat in years 11 to 20, decline 5% a year in years 21 to 30, and we credit nothing after that. Bear case, $113.90 per share. Year-one earnings fall 20%. HSA yields drop about one percentage point, which is roughly $1 per share after tax. Fuel prices fall; the company estimates each one-cent drop costs about $2 million of revenue. About $2.8 billion of debt maturing in 2026 to 2028 is refinanced at higher cost. Credit losses return toward the 2022 level of $180 million. After that, earnings shrink 2% a year to year 10 and 7% a year to year 20, as fuel volumes erode, and nothing is counted beyond that. Leverage makes this case worse: roughly $3.9 billion of debt principal falls due in 2026 to 2029, plus $550 million of senior notes issued in 2025, against about $540 million of annual owner earnings. WEX Bank also remains under a 2023 FDIC order, which the company says has not had a material effect. Bull case, $360.81 per share. Benefits keeps growing at its 2023 to 2025 pace, the first-half 2026 improvement carries through, and price increases continue. Earnings grow 7% a year for five years and 5% for the next five, then 2% a year to year 20, and hold flat to year 30. We are not relying on a recovery in fuel prices or interest rates in any case. The main ways this valuation could be wrong are a lasting fall in interest rates, which would cut HSA income; a faster shift of fleets away from fuel; or a credit loss much larger than the 2022 level.