It has been about a month since the last earnings report for Wesco International (WCC Quick QuoteWCC - Free Report) . Shares have added about 1.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Wesco International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

WESCO's Q4 Earnings & Revenues Beat Estimates

WESCO reported fourth-quarter 2021 adjusted earnings of $3.17 per share, reflecting 160% growth on a year-over-year basis. Also, the bottom line surpassed the Zacks Consensus Estimate by 24.3%. Further, the metric improved 15.7% sequentially.

The company reported quarterly net sales of $4.85 billion, up 17.5% year over year and 2.6% on a sequential basis. Also, the figure beat the Zacks Consensus Estimate by 4.5%.

The top-line growth was primarily driven by a strong performance by three business units and contributions from portfolio expansion.

Top-Line Details

The company operates under three business units, namely, Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS), and Utility & Broadband Solutions (UBS).

EES (41% of net sales): Sales in the segment were $1.99 billion for the fourth quarter, up 19.6% from the year-ago level. This was driven by solid momentum across construction, original equipment manufacturer and industrial businesses.

CSS (31% of net sales): Sales in the segment were $1.51 billion for the reported quarter, which increased 10.6% from the year-ago period. This was attributed to the well-performing security solutions and network infrastructure businesses.

UBS (28% of net sales): Sales in the segment were $1.34 billion for the reported quarter, up 23% from the year-ago reading. This was driven by robust utility, broadband and integrated supply businesses.

Operating Details

Gross margin was 20.8% for the reported quarter, which expanded 120 basis points (bps) from the year-ago level.

Selling, general and administrative expenses were $733.7 million, up 15% from the year-ago reading. As a percentage of net sales, the figure contracted 33 bps year over year to 15.1%.

WESCO’s adjusted operating margin was 5.6%, which expanded 140 bps from the prior-year level.

Adjusted EBITDA as a percentage of sales was 6.6% for the fourth quarter, which also expanded 140 bps year over year.

Balance Sheet & Cash Flow

As of Dec 31, 2021, cash & cash equivalents were $212.6 million, down from $251.8 million on Sep 30, 2021.

Long-term debt was $4.70 billion at fourth quarter-end compared with $4.57 billion in the prior quarter.

WESCO used $105.5 million cash for operations in the fourth quarter. It generated $69.9 million of cash from operations in the previous quarter.

For the fourth quarter, the company reported a negative free cash flow of $115.7 million.

Guidance

For 2022, management expects sales growth of 5-8%. The company expects adjusted EPS of $11-$12, indicating 10-20% year-over-year growth.

Adjusted EBITDA margin is expected between 6.7% and 7%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 13.78% due to these changes.

VGM Scores

Currently, Wesco International has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Wesco International has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.