delivered three consecutive positive earnings surprises that have
shown earnings acceleration. Add in some higher estimates and you
have all the components of a Zacks #1 Rank (Strong Buy).
Wesco International, Inc. is a leading provider of electrical
products and other industrial MRO supplies and services in North
America. The company is also a provider of Integrated Supply
services. Their Integrated Supply solutions and outsourcing
services fulfill a customer's industrial MRO procurement needs
through a highly automated, proprietary electronic procurement and
inventory replenishment system. It operates 400 branches and 8
distribution centers located in North America and internationally.
WESCO International, Inc. was founded in 1998 and is headquartered
in Pittsburgh, Pennsylvania.
WCC Tops Expectations Three Straight Times
WCC has beaten the Zacks Consensus Estimate in each of the last
three quarters. One of the beats, in the September 2011 quarter
saw the company post earnings of $1.13, $0.09 ahead of the Zacks
Consensus Estimate of $1.04. The stock then moved
higher by 10% after that 8.6% beat.
The string of beats started in the June 2011 quarter when the
company posted EPS of one dollar, but that was seven cents ahead
the Zacks Consensus Estimate of $0.93. The stock
moved higher by nearly 7% following the report.
WCC Recently Reported Earnings
On January 26, 2012 the company reported revenue of $1.59 billion
roughly $63 million more than the Zacks Consensus Estimate and
up from the $1.33 billion reported in the year ago period. EPS
of $1.12 was $0.15 ahead of the estimate or a 15% beat. As a
result the stock moved higher by about 6.5%.
Aggressive growth investors love to see beats, but they love it
even more when the company increases the acceleration of earnings
momentum with stronger beats on an absolute and percentage basis.
WCC has done just that in its last three beats.
Earnings Estimates Bumped Up
Following the most recent earnings report, analysts bumped up
their earnings estimates for 2012. The Zacks Consensus Estimate
for 2012 EPS moved from $4.34 in December 2011 to the current
level of $4.70.
The recent beats have pushed the multiples for the stock higher
than the industry averages, but are still quite palatable.
Forward PE of 14x is in line with the broader market but higher
than the industry average of 9x. The price to book of 2.1x is a
discount to the industry average of 3x. A larger discount can be
found in the price to sales metric, with WCC trading at .5x and
the industry average at 1.3x.
Looking at the price and consensus chart we see something that we
don't normally have with such reasonable valuations. The analysts
have been moving estimates higher over the last several years, but
the stock has been trading well above the estimates. This is
generally a sign of being over-priced, but the low multiples on
this stock make me believe that analysts have just been slow to
move estimates higher. As the stock continues to beat estimates
and accelerate the earnings momentum, new highs are likely to be
reached. WCC is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor