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WESCO's (WCC) Q4 Earnings Miss Estimates, Revenues Beat
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WESCO International, Inc. (WCC - Free Report) reported fourth-quarter 2020 adjusted earnings of $1.22 per share, which reflects a 7.6% year-over-year decrease. Also, the bottom line missed the Zacks Consensus Estimate of $1.32 per share.
The company reported quarterly net sales of $4.1 billion, up 96.7% year over year. The increase was due to its merger with Anixter that was completed on Jun 22, 2020, partially offset by weak demand as a result of the COVID-19 pandemic. The metric was also up 4.4% on a sequential basis.
Also, the figure surpassed the Zacks Consensus Estimate of $4.098 billion.
WESCO International, Inc. Price, Consensus and EPS Surprise
During the third quarter, the company organized the business into three strategic business units, namely, Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS) and Utility & Broadband Solutions (UBS).
EES: Revenues in this segment were $1.7 billion for the quarter, up 35.2% from the year-ago period.
CSS: Revenues in this segment were $1.4 billion for the fourth quarter, up 499.5% from the year-ago period.
UBS: Revenues in this segment were $1.1 billion for the fourth quarter, up 71.3% from the year-ago period.
Operating Details
Gross margin was 18.7% for the reported quarter, which expanded 10 basis points (bps) from the year-ago period.
Adjusted selling, general and administrative expenses were $637.9 million, or 15.5% of net sales for the fourth quarter.
WESCO’s adjusted operating margin came in at 4.2%, which expanded 10 bps from the prior-year quarter due to higher sales.
Balance Sheet & Cash Flow
At fourth quarter-end, cash & cash equivalents were $449.1 million, up from $352.2 million in the prior-year comparable period. Net long-term debt for fourth-quarter 2020 was $4.4 billion versus $4.9 billion in the prior-year period.
WESCO generated $125 million of cash from operations and $124 million in free cash flow for the reported quarter.
Guidance
For 2021, management expects sales growth to increase to 6% from 3% a year ago in all three business units. In addition, adjusted EBITDA margins are expected to expand in the range of 5.4-5.7% and adjusted EPS growth is projected in the range of $5.50-$6.00.
Long-term earnings growth for Semtech, JD.com, and Microchip Technology is currently projected at 12.5%, 51.2% and 14.9%, respectively.
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WESCO's (WCC) Q4 Earnings Miss Estimates, Revenues Beat
WESCO International, Inc. (WCC - Free Report) reported fourth-quarter 2020 adjusted earnings of $1.22 per share, which reflects a 7.6% year-over-year decrease. Also, the bottom line missed the Zacks Consensus Estimate of $1.32 per share.
The company reported quarterly net sales of $4.1 billion, up 96.7% year over year. The increase was due to its merger with Anixter that was completed on Jun 22, 2020, partially offset by weak demand as a result of the COVID-19 pandemic. The metric was also up 4.4% on a sequential basis.
Also, the figure surpassed the Zacks Consensus Estimate of $4.098 billion.
WESCO International, Inc. Price, Consensus and EPS Surprise
WESCO International, Inc. price-consensus-eps-surprise-chart | WESCO International, Inc. Quote
Top-line Details
During the third quarter, the company organized the business into three strategic business units, namely, Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS) and Utility & Broadband Solutions (UBS).
EES: Revenues in this segment were $1.7 billion for the quarter, up 35.2% from the year-ago period.
CSS: Revenues in this segment were $1.4 billion for the fourth quarter, up 499.5% from the year-ago period.
UBS: Revenues in this segment were $1.1 billion for the fourth quarter, up 71.3% from the year-ago period.
Operating Details
Gross margin was 18.7% for the reported quarter, which expanded 10 basis points (bps) from the year-ago period.
Adjusted selling, general and administrative expenses were $637.9 million, or 15.5% of net sales for the fourth quarter.
WESCO’s adjusted operating margin came in at 4.2%, which expanded 10 bps from the prior-year quarter due to higher sales.
Balance Sheet & Cash Flow
At fourth quarter-end, cash & cash equivalents were $449.1 million, up from $352.2 million in the prior-year comparable period. Net long-term debt for fourth-quarter 2020 was $4.4 billion versus $4.9 billion in the prior-year period.
WESCO generated $125 million of cash from operations and $124 million in free cash flow for the reported quarter.
Guidance
For 2021, management expects sales growth to increase to 6% from 3% a year ago in all three business units. In addition, adjusted EBITDA margins are expected to expand in the range of 5.4-5.7% and adjusted EPS growth is projected in the range of $5.50-$6.00.
Zacks Rank & Key Picks
WESCO currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Semtech Corporation (SMTC - Free Report) , JD.com, Inc. (JD - Free Report) and Microchip Technology Incorporated (MCHP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Semtech, JD.com, and Microchip Technology is currently projected at 12.5%, 51.2% and 14.9%, respectively.
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Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.9% per year.
These 7 were selected because of their superior potential for immediate breakout.
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