Technical Indicators under Consideration – WEX Inc (NYSE: WEX)

U.S. stocks closed sharply higher Friday as Wall Street shrugged off lackluster numbers in the government’s monthly jobs report while shares of Apple hit an all-time high to lead the technology sector higher.

The Dow Jones industrial average closed 332.36 points higher at 24,262.51 thanks to a 3.92 percent rally in Apple’s stock, which jumped after famed shareholder Warren Buffett revealed that he bought millions of shares of the iPhone maker in recent months. By the closing bell, Apple had posted a gain of 13.45 percent for the week, its best since October 2011.

The S&P 500 rose 1.28 percent to finish at 2,663.42 after falling 0.4 percent earlier in the day, buoyed by a nearly 2 percent gain in tech, which led all 11 sectors for gains. The Nasdaq composite rose 1.71 percent to close at 7,209.62, its first positive day in the last three sessions. The index was led higher by the aforementioned rally in Apple, a 1.49 percent gain in Facebook and a 2.41 percent boost in Google-parent Alphabet.

The positive numbers on Friday, however, were not enough to offset weekly losses for the Dow and S&P 500, each down roughly 0.2 percent since Monday.

Leading the strong numbers in stocks Friday, Apple jumped sharply after billionaire shareholder Warren Buffett revealed that he bought 75 million shares during the first quarter, which added to the conglomerate’s already massive stake in the tech giant.

Buffett estimated that Berkshire Hathaway’s cash position dipped to “a little over” $100 billion because of lots of stock buying in the first three months of the year.

Tech also rose after a 4.5 percent bump in Activision Blizzard, which stated adjusted earnings and revenue that beat Wall Street expectations Thursday. The company stated its official numbers after Dow Jones stated a few incorrect headlines about its financial report earlier on Thursday.

The Labor Department stated that the economy added 164,000 jobs in the month of April, lower than the 195,000 predictable by economists polled by Reuters. Average hourly earnings growth also missed, rising only 0.15 percent against expectations of a 0.2 percent gain. (Source: CNBC)

Stock to Watch: WEX Inc (NYSE: WEX)

On Friday, Shares of WEX Inc (NYSE: WEX) 0.82% and ended its trading session at $168.49. The company saw 581,767 shares trade hands over the course of the day. Given that its average daily volume over the 30 days has been 369.94K shares a day, this signifies a pretty noteworthy change over the norm.

Technical Analysis:

The analysts, on average, are forecasting a $177.23 price target, but the individual stock is already up 72.49% from its recent lows. However, the stock is trading at -1.40% as compared to recent highs. Leading up to this report, we have seen a 5.95% return in the stock price over the last 30 days and a 12.60% return over the past 3 months. Since the starting of the calendar year, the stock’s performance is recorded at 19.30%.

The stock price recently practiced a 5-day change of 4.32% with 4.46 as average true range (ATR). WEX has a beta of 1.82 and RSI is 63.32. The stock declared an annual dividend of $N/A per share.

Introduction to Net Income & Its Uses in Most Important Indicators:

Income is money received by an individual or business in exchange for supplying a good or service or through investing capital. Income is consumed to fuel day-to-day expenditures. In businesses, income can refer to a company’s remaining revenues after all expenses and taxes have been paid. In this case, it is also known as “earnings”. Most forms of income are subject to taxation.

However, Net income (NI) is a corporation’s total earnings (or profit); net income is computed by taking revenues and subtracting the costs of doing business such as depreciation, interest, taxes and other expenses. This number appears on a company’s income statement and is an important measure of how profitable the company is over a period of time.

Role of Net Income in Calculating EPS:

Businesses use net income to calculate their earnings per share (EPS). Business analysts often refer to net income to as the bottom line, since it is listed at the bottom of the income statement. In the United Kingdom, NI is known as profit attributable to shareholders. To know the company’s net income – refer to this link: WEX Inc (NYSE: WEX) is a stock with 43.02M shares outstanding. As the earnings per share (EPS) formula is stated as earnings available to common shareholders divided by number of common stock shares outstanding, therefore its diluted EPS is calculated to be 1.53 (ttm). EPS is an indicator of company profit because the more earnings a company can generate per share, the more valuable each share is to shareholders.

A key aspect of EPS that’s often overlooked is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) – that company would be more efficient at using its capital to generate income and, all other things being equal would be a “better” company. Shareholders also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.

Role of EPS in Calculating Price to Earnings Ratio (P/E):

Earnings per share are generally pondered to be the single most essential variable in determining a share’s price. It is also a key component used to calculate the price-to-earnings valuation (P/E) ratio.

Analysts also use the price-to-earnings (P/E) ratio for stock valuation, which is calculated as market price per share ($168.49) divided by EPS (1.53). Price to earnings ratio (P/E) for WEX stock is recorded at $110.34. The P/E ratio calculates how expensive a stock price is relative to the earnings produced per share. For example, if the P/E ratio of a stock is 20 times earnings, an analyst compares that P/E ratio to other companies in the same industry and to the ratio for the broader market.

Analysts’ Recommendation to Consider:

Analysts have a mean recommendation of 2.00 on this stock (A rating of less than 2 means buy, “hold” within the 3 range, “sell” within the 4 range, and “strong sell” within the 5 range).

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Marion Frost

Marion Frost

I am Marion Frost and I have over 16 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets. I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.