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WESCO Q3 Earnings & Revenues Beat Estimates: Buy, Sell, or Hold Stock?
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WESCO International (WCC - Free Report) has reported third-quarter 2024 adjusted earnings of $3.58 per share, down 20.3% year over year. The bottom line beat the Zacks Consensus Estimate by 11.18%.
WCC’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, missing the same in the remaining three quarters, the average negative surprise being 8.34%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net sales of $5.489 billion fell 2.7% year over year. The figure beat the Zacks Consensus Estimate by 0.55%. Organic sales declined 0.6% year over year.
The company’s shares gained 1.57% in the pre-market trading. WCC shares have returned 10.4% year to date, underperforming the Zacks Computer & Technology sector’s appreciation of 27%.
However, an unimpressive fourth-quarter 2024 guidance reflects weak prospects for WESCO.
WESCO International, Inc. Price, Consensus and EPS Surprise
The EES Segment (39.2% of Net Sales): Sales in the segment were $2.15 billion, down 1.8% year over year. Organic sales declined 2.9% year over year.
CSS (35.6% of Net Sales): Sales in the segment were $1.96 billion, up 10% year over year. Organic sales increased 8.5% on a year-over-year basis.
UBS (25.2% of Net Sales): Sales in the segment were $1.38 billion, down 17.5% year over year. Organic sales declined 7.2% year over year.
Large Contract Wins Enhance WESCO’s Prospects
WCC secured a $50-million contract in the EES Segment for a Canadian Hospital Project, leveraging strong client relationships and project management expertise.
WESCO’s CSS segment secured a four-year, $200-million contract to supply high-speed fiber, cable management, racks, accessories and deployment services for a data center project in South America.
The UBS segment secured a five-year, $2-billion contract extension with a North America utility to deliver supply-chain services for grid modernization, operational support and emergency response.
The third-quarter 2024 gross margin was 22.1%, marking a year-over-year increase of 50 basis points (bps), driven by the Integrated Supply divestiture.
The adjusted EBITDA margin of 7.3% declined 80 bps year over year.
Selling, general and administrative expenses were $825.2 million, up 6.4% year over year. As a percentage of net sales, the figure increased 130 bps year over year to 15%.
The adjusted operating margin was 6.2%, which contracted 90 bps year over year.
Balance Sheet & Cash Flow
As of Sept. 30, 2024, cash and cash equivalents were $706.8 million, down from $716.5 million as of June 30, 2024.
The long-term debt was $5.01 billion at the third-quarter end compared with $5.2 billion in the prior quarter.
The company generated $302.1 million in cash from operations in the reported quarter compared with $223.8 million in the previous quarter.
For the third quarter, WESCO reported a free cash flow of $279.5 million compared with the previous quarter’s $234.1 million.
WESCO Retains 2024 Guidance
For 2024, WESCO expects organic sales between a decline of 1.5% and growth of 0.5%. Sales on a reported basis are expected to be $21.6-$22 billion.
WESCO expects the adjusted EBITDA margin between 7% and 7.3%.
The adjusted diluted EPS is expected between $12 and $13 per share.
The free cash flow is expected between $800 million and $1 billion.
Zacks Rank & Stocks to Consider
WESCO carries a Zacks Rank #5 (Strong Sell) at present, which implies that investors should stay away from the stock for the time being.
Image: Bigstock
WESCO Q3 Earnings & Revenues Beat Estimates: Buy, Sell, or Hold Stock?
WESCO International (WCC - Free Report) has reported third-quarter 2024 adjusted earnings of $3.58 per share, down 20.3% year over year. The bottom line beat the Zacks Consensus Estimate by 11.18%.
WCC’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, missing the same in the remaining three quarters, the average negative surprise being 8.34%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net sales of $5.489 billion fell 2.7% year over year. The figure beat the Zacks Consensus Estimate by 0.55%. Organic sales declined 0.6% year over year.
The company’s shares gained 1.57% in the pre-market trading. WCC shares have returned 10.4% year to date, underperforming the Zacks Computer & Technology sector’s appreciation of 27%.
However, an unimpressive fourth-quarter 2024 guidance reflects weak prospects for WESCO.
WESCO International, Inc. Price, Consensus and EPS Surprise
WESCO International, Inc. price-consensus-eps-surprise-chart | WESCO International, Inc. Quote
WCC’s Top-Line Details
The EES Segment (39.2% of Net Sales): Sales in the segment were $2.15 billion, down 1.8% year over year. Organic sales declined 2.9% year over year.
CSS (35.6% of Net Sales): Sales in the segment were $1.96 billion, up 10% year over year. Organic sales increased 8.5% on a year-over-year basis.
UBS (25.2% of Net Sales): Sales in the segment were $1.38 billion, down 17.5% year over year. Organic sales declined 7.2% year over year.
Large Contract Wins Enhance WESCO’s Prospects
WCC secured a $50-million contract in the EES Segment for a Canadian Hospital Project, leveraging strong client relationships and project management expertise.
WESCO’s CSS segment secured a four-year, $200-million contract to supply high-speed fiber, cable management, racks, accessories and deployment services for a data center project in South America.
The UBS segment secured a five-year, $2-billion contract extension with a North America utility to deliver supply-chain services for grid modernization, operational support and emergency response.
WCC Gross Margin Expands Y/Y, Operating Margin Contracts
The third-quarter 2024 gross margin was 22.1%, marking a year-over-year increase of 50 basis points (bps), driven by the Integrated Supply divestiture.
The adjusted EBITDA margin of 7.3% declined 80 bps year over year.
Selling, general and administrative expenses were $825.2 million, up 6.4% year over year. As a percentage of net sales, the figure increased 130 bps year over year to 15%.
The adjusted operating margin was 6.2%, which contracted 90 bps year over year.
Balance Sheet & Cash Flow
As of Sept. 30, 2024, cash and cash equivalents were $706.8 million, down from $716.5 million as of June 30, 2024.
The long-term debt was $5.01 billion at the third-quarter end compared with $5.2 billion in the prior quarter.
The company generated $302.1 million in cash from operations in the reported quarter compared with $223.8 million in the previous quarter.
For the third quarter, WESCO reported a free cash flow of $279.5 million compared with the previous quarter’s $234.1 million.
WESCO Retains 2024 Guidance
For 2024, WESCO expects organic sales between a decline of 1.5% and growth of 0.5%. Sales on a reported basis are expected to be $21.6-$22 billion.
WESCO expects the adjusted EBITDA margin between 7% and 7.3%.
The adjusted diluted EPS is expected between $12 and $13 per share.
The free cash flow is expected between $800 million and $1 billion.
Zacks Rank & Stocks to Consider
WESCO carries a Zacks Rank #5 (Strong Sell) at present, which implies that investors should stay away from the stock for the time being.
Arista Networks (ANET - Free Report) , Cirrus Logic (CRUS - Free Report) and Fair Isaac (FICO - Free Report) are some better-ranked stocks in the broader sector, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arista Networks shares have gained 64.1% year to date. ANET is set to report third-quarter 2024 results on Nov. 7.
Cirrus Logic shares have gained 32% year to date. CRUS is set to report second-quarter fiscal 2025 results on Nov. 4.
Fair Isaac shares have risen 71.2% year to date. FICO is set to report third-quarter 2024 results on Nov. 6.