WageWorks: Health Savings and Benefit Plans

09/19/2017 2:52 am EST

Focus: FINANCIALS

Todd Shaver

Founder and Editor-in-Chief, BullMarket.com

WageWorks (WAGE) is a leading on-demand provider of tax-advantaged programs for health and other employee spending account benefits, known as Consumer-Directed Benefits, in the United States, explains growth stock expert Todd Shaver, editor of BullMarket.com.


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Why does the everyday working man love WageWorks? The Consumer-Directed Benefits programs enable employees and their families to save money by using pre-tax dollars.

Who doesn’t love to save on taxes? Employers financially benefit from the programs through reduced payroll taxes, even after factoring in fees.

WageWorks is the provider of choice to many of the nation’s largest and most innovative companies including: 68% of the Fortune 100 and 55% of the Fortune 500.

The company’s early stage penetration of the health savings account (HSA) market represents one of the most visible growth drivers over the next three years. HSAs represent between 20% and 25% of WAGE’s health care accounts.

We recommend WageWorks based on trends favoring consumer-directed benefits and increasing participation rates, the likelihood of accretive acquisitions, new channel partnerships, opportunities presented by private and public health care exchanges, and the company’s unusual high degree of revenue visibility.

By revenue visibility we mean that over 80% next year sales are booked at the beginning of the year due to the nature of contracts with employers so the company’s revenue outlook is far less surprising than most companies. We love this.


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The company’s early stage penetration of the health savings account market is a lucrative opportunity we are excited about. There is so much potential here from secular growth in HSAs, to accretive acquisitions, or to even a take-out.

The company has more room to go until it captures greater than an 80% share of the Fortune 100 and Fortune 500. We think this company ultimately gets bought for a big valuation.

With EPS closing in on $2, valuation is not cheap but that is not a problem for us as we see the stellar growth opportunity to be worth paying up for.

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