It has been about a month since the last earnings report for Wesco International (WCC Quick QuoteWCC - Free Report) . Shares have added about 28.7% 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 Q1 Earnings & Revenues Fall Short of Estimates

WESCO International, Inc. reported first-quarter 2019 adjusted earnings of 91 cents per share, which reflects a 4.3% year-over-year improvement. However, the bottom line missed the Zacks Consensus Estimate of 97 cents per share.

Net sales in the quarter were $1.97 billion, up 0.4% year over year. However, the figure lagged the Zacks Consensus Estimate by 1.7%.

The company’s sales in the United States were down 1% from the year-ago quarter. In Canada, sales were also down 4% year over year due to weakness in construction, as many local governments shut down projects starting in March as a result of the pandemic outbreak. Industrial sales were down in the United States but up in Canada during the first quarter. Overall international sales were down from the year-ago quarter.

The company’s organic sales in the reported quarter declined 1.7% from the prior-year period. However, acquisitions contributed 0.5% to sales.

Management stated that sales were negatively impacted by the COVID-19 outbreak. The virus slowed down sales across all market verticals beginning in the second half of March, with monthly sales declining 14%.

Nevertheless, the bidding activity was robust across all market verticals, as is evident from numerous contract renewals and new wins in the quarter. The company remains focused on strategic investments and margin expansion initiatives. Further, WESCO stays confident about product portfolio strength, value-added services and end-market momentum. These are likely to help the stock rebound in the near term.

Operating Details

Gross margin was 19.1% in the reported quarter, which contracted 40 basis points (bps) from the year-ago period. This was due to an unfavorable business mix and hike in supplier prices.

Selling, general and administrative expenses increased 0.97% on a year-over-year basis.

WESCO’s operating margin came in at 3.1%, contracting 50 bps from the prior-year quarter due to lower sales.

Balance Sheet & Cash Flow

As the end of the first quarter, cash & cash equivalents were $342.6 million, up from $150.9 million in the prior-year comparable period. Long-term debt in first-quarter 2019 was $1.54 billion compared with $1.26 billion at the end of the previous quarter.

WESCO generated $31.5 million of cash from operations and $15.8 million in free cash flow in the reported quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -33.8% due to these changes.

VGM Scores

At this time, Wesco International has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Wesco International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.