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Wesco International (WCC)
NYSE:WCC
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Wesco International
(NYSE:WCC)70Outperform
Positive Factors
Digital Transformation
Management went into much greater detail on digital transformation as WCC transitions from 27 ERP’s to a single unified global platform.
Mergers and Acquisitions
Management signaled acquisitions will be the primary use of capital as WCC seeks to acquire accretive margin businesses and/or solutions expertise.
Negative Factors
Industry Trends
Given lackluster industry trends, there is no expectation of major change in tone since choppy, multi-speed trends led to a reduction in outlook when 2Q24 was reported on August 1.
Wesco International (WCC) vs. S&P 500 (SPY)
Market Cap
$8.81B
Dividend Yield0.97%
Average Volume (3M)746.42K
Price to Earnings (P/E)13.8
Beta (1Y)1.93
Revenue Growth-2.53%
EPS Growth-4.03%
CountryUS
Employees20,000
SectorIndustrials
Sector Strength66
IndustryIndustrial Equipment Distributors
Share Statistics
EPS (TTM)13.08
Shares Outstanding48,795,930
10 Day Avg. Volume722,122
30 Day Avg. Volume746,418
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.40
Price to Cash Flow (P/CF)8.00
P/FCF Ratio8.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$227.57Price Target Upside38.98% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
Wesco International Business Overview & Revenue Model
Company DescriptionWesco International (WCC) is a leading provider of business-to-business distribution, logistics services, and supply chain management solutions. The company operates across various sectors, including electrical and electronic solutions, communications and security solutions, and utility and broadband solutions. Wesco offers a broad array of products and services, including electrical equipment, industrial supplies, safety products, and data communications products, catering to a diverse client base in industries such as construction, manufacturing, utilities, and government.
How the Company Makes MoneyWesco International makes money primarily through the sale and distribution of electrical, industrial, and communications products to a wide range of industries. The company generates revenue through its extensive product offerings, which include electrical equipment, industrial supplies, and communications products. A significant portion of its revenue comes from comprehensive supply chain management services, which help clients optimize their procurement processes and reduce operational costs. Additionally, Wesco benefits from strategic partnerships and long-term contracts with key suppliers and customers, enhancing its ability to offer competitive pricing and maintain steady revenue streams. The company's expansive distribution network and value-added services, such as inventory management, technical support, and logistics solutions, further contribute to its earnings.
Wesco International Financial Statement Overview
Summary
Wesco International exhibits strong financial performance with consistent revenue growth, solid gross profit margins, and effective earnings generation. The balance sheet is stable but poses some risk due to significant debt levels. Cash flow management is robust, supporting liquidity and flexibility.Income Statement
Wesco International has shown consistent revenue growth over the years, with a noticeable increase from 2020 to 2021. The gross profit margin has improved significantly, reflecting strong operational efficiency. However, the net profit margin has seen fluctuations, indicating some volatility in managing costs beyond the gross level. EBIT and EBITDA margins are solid, showcasing effective earnings generation before non-operational influences.78
Positive
Balance Sheet
The company's balance sheet indicates a stable equity base, with a gradual increase in stockholders' equity. The debt-to-equity ratio is moderate, suggesting a balanced approach to leveraging. The equity ratio shows a healthy proportion of equity financing. However, total debt remains significant, posing a potential risk in times of financial stress.72
Positive
Cash Flow
Wesco International's cash flow statements reveal robust operating cash flow, with a strong free cash flow generation, indicating effective cash management. The operating cash flow to net income ratio is favorable, suggesting that earnings are well-supported by cash operations. The company has shown significant improvement in free cash flow over the years, enhancing its financial flexibility.85
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 21.82B | 22.39B | 21.42B | 18.22B | 12.33B | Gross Profit |
| 4.71B | 4.84B | 4.66B | 3.79B | 2.33B | EBIT |
| 1.22B | 1.41B | 1.44B | 801.87M | 347.04M | EBITDA |
| 1.50B | 1.56B | 1.61B | 1.05B | 471.03M | Net Income Common Stockholders |
| 660.20M | 765.50M | 860.50M | 465.40M | 100.56M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 702.60M | 524.10M | 527.35M | 212.58M | 449.13M | Total Assets |
| 15.06B | 15.06B | 14.81B | 12.62B | 11.88B | Total Debt |
| 634.30M | 5.96B | 5.42B | 4.71B | 4.90B | Net Debt |
| -68.30M | 5.44B | 4.89B | 4.50B | 4.45B | Total Liabilities |
| 10.10B | 10.03B | 10.36B | 8.84B | 8.54B | Stockholders Equity |
| 4.97B | 5.04B | 4.45B | 3.78B | 3.34B |
| Cash Flow | Free Cash Flow | |||
| 1.01B | 400.90M | -88.37M | 12.39M | 487.26M | Operating Cash Flow |
| 1.10B | 493.20M | 11.04M | 67.14M | 543.93M | Investing Cash Flow |
| 40.40M | -89.60M | -283.57M | 2.54M | -3.74B | Financing Cash Flow |
| -928.30M | -403.90M | 584.03M | -310.78M | 3.48B |
Wesco International Technical Analysis
Negative
163.74
Price Trends
184.84
Negative
188.88
Negative
177.25
Negative
Market Momentum
-4.36
Positive
31.32
Neutral
13.28
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WCC, the sentiment is Negative. The current price of 163.74 is below the 20-day moving average (MA) of 184.99, below the 50-day MA of 184.84, and below the 200-day MA of 177.25, indicating a bearish trend. The MACD of -4.36 indicates Positive momentum. The RSI at 31.32 is Neutral, neither overbought nor oversold. The STOCH value of 13.28 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WCC.
Wesco International Risk Analysis
Wesco International disclosed 29 risk factors in its most recent earnings report. Wesco International reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Wesco International Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $1.42B | 22.27 | 16.19% | ― | 3.60% | 17.58% | |
78 Outperform | $9.62B | 25.37 | 21.53% | 0.63% | 0.37% | 3.52% | |
73 Outperform | $43.43B | 37.80 | 31.82% | 2.11% | 2.71% | -0.63% | |
72 Outperform | $4.49B | 19.18 | 17.15% | 4.18% | -5.24% | -28.94% | |
71 Outperform | $49.24B | 26.21 | 51.55% | 0.80% | 4.19% | 6.60% | |
70 Outperform | $8.81B | 13.83 | 13.28% | 0.97% | -2.53% | -4.03% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
WCC
Wesco International
163.74
10.36
6.75%
AIT
Applied Industrial Technologies
229.86
47.17
25.82%
DXPE
DXP Enterprises
81.82
46.76
133.37%
FAST
Fastenal Company
74.23
1.55
2.13%
MSM
MSC Industrial
77.03
-17.87
-18.83%
GWW
WW Grainger
988.78
13.96
1.43%
Wesco International Earnings Call Summary
Earnings Call Date: Feb 11, 2025 | % Change Since: -11.64% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call revealed strong growth in data centers and broadband, effective strategic acquisitions, and a positive outlook for 2025. However, challenges remain in the utility and industrial segments, and gross margin pressures persist. Overall, the positive aspects and strong future outlook outweigh the challenges.Highlights
Record Free Cash Flow
The company generated record free cash flow of more than $1 billion in 2024, representing 154% of adjusted net income.
Strong Data Center Growth
WESCO's data center solutions business grew more than 70% in the fourth quarter, showing exceptional growth and contributing to nearly 40% of CSS sales.
Broadband Business Growth
The broadband business grew more than 20% in the fourth quarter, indicating a return to growth and momentum in the Canadian market.
Strategic Acquisitions and Divestitures
WESCO strengthened its portfolio by divesting a low-margin business and acquiring higher-margin service-based businesses, including Ascent, which enhances their data center service offerings.
Positive Outlook for 2025
The company expects organic sales to grow 2.5% to 6.5% in 2025, with all business units expected to deliver profitable growth.
Lowlights
Utility Segment Weakness
The utility market faced continued headwinds from customer destocking and lower project activity levels, impacting sales and expected to continue into the first half of 2025.
Industrial Market Slowdown
A slowdown with industrial customers, especially in the last two weeks of December, was noted as a challenge, contributing to a weaker performance in the industrial segment.
Gross Margin Pressure
Gross margin was down 20 basis points year-over-year in the fourth quarter, impacted by lower supplier volume rebates and lower margins in the data center segment.
Company Guidance
In the recent earnings call, WESCO International provided guidance for 2025, projecting organic sales growth between 2.5% and 6.5%, with expected operating margin expansion across all three business units. The company's outlook includes generating $600 million to $800 million in free cash flow and an intention to increase the common stock dividend by 10% to $1.82 per share. Key achievements in 2024 set a positive trajectory, including a record free cash flow of over $1 billion, a $431 million reduction in net debt, and a $425 million share repurchase. WESCO's strategic moves, including divestitures and acquisitions, are anticipated to support their long-term goal of reaching a 10%+ EBITDA margin. They also emphasized their commitment to growth through digital transformation and strategic acquisitions aligned with trends like AI-driven data centers and electrification.Wesco International Corporate Events
Business Operations and StrategyFinancial Disclosures
Wesco International Reports Sales Growth in Q4 2024
Positive
Feb 11, 2025
Wesco International reported a 0.5% year-over-year increase in net sales for the fourth quarter of 2024, driven by significant growth in their global data center and broadband solutions businesses, despite challenges in the industrial and utility sectors. The company achieved record operating cash flow and free cash flow for the year, bolstered by strategic acquisitions and effective working capital management. Looking forward to 2025, Wesco anticipates continued organic sales growth and an increase in operating margins, supported by ongoing digital transformation and business expansion efforts.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.