initial public offerings (IPOs) trading on American exchanges

Monday, February 23, 2015

WageWorks (WAGE) is working on a new base

WageWorks (NYSE:WAGE), which manages employee benefits programs, is working on a new base amid accelerating sales and profit growth.

The stock has risen more than sixfold from its May 2012 debut at 9 a share. It's now working on a less risky first-stage base after resetting its base count amid a sharp correction in the first half of last year.

San Mateo, Calif.-based WageWorks is benefiting from a growing shift to flexible spending accounts and health savings accounts, which give employees a tax break for contributions. The accounts are portable, which means they can be taken from one employer to another.

WageWorks' best-possible 99 Composite Rating puts it among the leaders of the 24-stock Commercial Services-Outsourcing industry group, which was ranked No. 11 out of 197 as of Monday's IBD. Trinet Group (NYSE:TNET), which provides human resources services, is another industry leader.

Profit has picked up for two straight quarters, from a 20% increase in the second quarter of last year to subsequent gains of 33% and 35%. Sales growth has also accelerated over that span, rising 8%, 27% and 43%.



Revenue for the period was driven by increases in health care administration fees and commuter benefits plans, which give tax incentives to employees who use public transportation or other environmentally friendly ways of getting to work.

Fund ownership of the stock has slipped in recent quarters, from 335 in the first quarter of 2014 to 324 as of Q4. However, the A+-rated T Rowe Price New Horizons Fund boosted its stake in the latest quarter.
The stock is shaping a base-on-base pattern after a failed breakout over a 62.34 buy point of a cup-with-handle base.

It's pulled back to its 10-week moving average in light volume, which is a good sign. However, its relative strength line is fading, indicating that the stock is underperforming the S&P 500.

For this year, analysts expect WageWorks to post a 22% gain in profit to $1.16 a share, followed by another 22% increase in 2016.

Annual pretax margin has picked up for three straight years, to a robust 21.2% last year.

No comments:

Post a Comment