WEX Extends Risk Management Program - Analyst Blog
26 Marzo 2013 - 8:10AM
Zacks
Recently, a leading provider of
corporate payment solutions, WEX Inc. (WXS)
declared the extension of its fuel–price risk management program.
The new program is scheduled to extend through to the third quarter
of 2014.
On Mar 18, 2013 WEX purchased
instruments to partially insure expected domestic
fuel-price-related earnings exposure for the first, second and
third quarters of 2014. The company, through these instruments has
reduced up to 60%, 40% and 20% of the expected risks for the first,
second and third quarters of 2014 respectively. WEX aims to reduce
approximately 60% of its price-oriented earnings exposure every
quarter on a rolling basis.
These instruments purchased by WEX
are specifically designed to improve the future earnings
predictions of a company. The fuel-price risk management program of
WEX utilizes these instruments to create a “costless collar” to
protect it from future exposures. It is based upon the weekly
diesel fuel price index of the U.S. Department of Energy and NYMEX
unleaded gasoline contracts. The fuel price range considered is
$3.43 to $3.49 per gallon.
WEX has been continuously extending
its fuel price risk management program to cover its fuel price
related earnings exposures. On Dec 14, 2012, the company extended
its existing fuel-price risk management program through the second
quarter of 2014. For this it purchased instruments on Dec 10, 2012
which allowed it to hedge nearly 60% through the third quarter of
2013 and 40% and 20% through the first and second quarters of 2014
exposure.
WEX currently carries a Zacks Rank
#4 (Sell). Among others from the industry Alliance Data
Systems Corporation (ADS), Fiserv Inc.
(FISV) and Total System Services (TSS) carry a
favorable Zacks Rank #2 (Buy) and are worth noting.
ALLIANCE DATA (ADS): Free Stock Analysis Report
FISERV INC (FISV): Free Stock Analysis Report
TOTAL SYS SVC (TSS): Free Stock Analysis Report
WEX INC (WXS): Free Stock Analysis Report
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