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WESCO (WCC) Q1 Earnings & Sales Beat Estimates, Rise Y/Y

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WESCO International, Inc. (WCC - Free Report) reported first-quarter 2021 adjusted earnings of $1.43 per share, which reflects growth of 57.1% on a year-over-year basis. Also, the bottom line surpassed the Zacks Consensus Estimate by 88.2%.

The company reported quarterly net sales of $4.04 billion, up 105.3% year over year. Also, the figure beat the Zacks Consensus Estimate of $4.03 billion.

Top-line growth was primarily driven by the positive contributions from the company’s merger with Anixter, which was completed on Jun 22, 2020.

Top-line Details

In third-quarter 2020, the company organized the business into three business units namely, Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS) and Utility & Broadband Solutions (UBS).

EES (42.6% of net sales): Sales in the segment were $1.7 billion for the first quarter, up 54.4% from the year-ago period.

CSS (30.9% of net sales): Sales in the segment were $1.3 billion for the reported quarter, which significantly jumped from $223.7 million in the year-ago period.

UBS (26.5% of net sales): Sales in the segment were $1.1 billion for the reported quarter, up 69.7% from the year-ago period.

WESCO International, Inc. Price, Consensus and EPS Surprise

WESCO International, Inc. Price, Consensus and EPS Surprise

WESCO International, Inc. price-consensus-eps-surprise-chart | WESCO International, Inc. Quote

Operating Details

Gross margin was 20.1% for the reported quarter, which expanded 100 basis points (bps) from the year-ago period.

Further, selling, general and administrative expenses were $636.6 million, up 112.6% from the year-ago quarter.

WESCO’s adjusted operating margin was 4.2%, which expanded 90 bps from the prior-year quarter.

Balance Sheet & Cash Flow

As of Mar 31, 2021, cash & cash equivalents were $303.9 million, up from $449.1million as of Dec 31, 2020.

Long-term debt was $4.6 billion at the end of the first quarter versus $4.4 billion at the end of the fourth quarter of 2020.

WESCO generated $120.5 million cash from operations in the reported quarter compared with $125 million of cash from operations in the previous quarter.

Further, the company generated $124.8 million of free cash flow in the first quarter.

Guidance

For 2021, management has raised its guidance for sales growth from 3-6% to 4.5-7.5%. The Zacks Consensus Estimate for 2021 sales is pegged at $16.9 billion.

In addition, adjusted EBITDA margins are expected to expand 5.8-6.1%.

Further, the company raised the guidance for adjusted EPS from $5.50-$6.00 to $6.80-$7.30. The Zacks Consensus Estimate for earnings is pegged at $5.92 per share.

Zacks Rank & Stocks to Consider

WESCO currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector worth consideration are Agilent Technologies (A - Free Report) , Pure Storage (PSTG - Free Report) and NVIDIA (NVDA - Free Report) . All the stocks carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

Long-term earnings growth rate of Pure Storage, NVIDIA and Agilent, is pegged at 52.21%, 15.05% and 9%, respectively.

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