WEX - Corpay: Short-Term Concerns And A Predictable Business

2024-05-23 13:34:33 ET

Summary

• Corpay is a highly predictable business that seeks to unify payments for clients who require frequent work trips or who operate fleets of vehicles.
• The company has EBITDA margins of more than 50%, leaving clues to the high added value of Corpay's services.
• Management reduced its guidance during Q1 2024 and now expects to grow around 7% only, but made it clear that this should be temporary.
• Thanks to this short-term fear, the company is currently trading at a P/E of 20, which is a multiple below its historical average of 25.

Investment Thesis

I recently wrote about Wex (WEX), a company similar to Corpay (CPAY) that has a cheaper valuation, but in my opinion, it's justified because Corpay has better financials derived from its greater scale and operational efficiency....

For further details see: