Wesco Earnings: End Markets Continue to be Challenged
The market reacted positively to Wesco’s first-quarter earnings. Shares were up nearly 7% in trading on May 2. We now think Wesco’s shares are 15% undervalued.
The market reacted positively to Wesco’s first-quarter earnings. Shares were up nearly 7% in trading on May 2. We now think Wesco’s shares are 15% undervalued.
Wesco's transformative acquisition of Anixter should result in stronger growth and profitability, which should help the stock fetch a higher multiple.
Amazon Business and other internet-based competitors could disrupt the industrial distribution industry, taking market share and pressuring Wesco’s already low margins.
Metric
|
WCC
|
GWW
|
FAST
|
---|---|---|---|
Price/Earnings (Normalized) | 14.32 | 26.14 | 32.92 |
Price/Book Value | 1.92 | 14.68 | 11.07 |
Price/Sales | 0.44 | 2.87 | 5.15 |
Price/Cash Flow | 10.68 | 20.82 | 28.61 |
Metric
|
WCC
|
GWW
|
FAST
|
---|---|---|---|
Quick Ratio | 1.20 | 1.24 | 1.98 |
Current Ratio | 2.21 | 2.19 | 4.57 |
Interest Coverage | 3.31 | 28.70 | 141.55 |
Metric
|
WCC
|
GWW
|
FAST
|
---|---|---|---|
Return on Assets (Normalized) | 4.52% | 23.90% | 25.54% |
Return on Equity (Normalized) | 14.11% | 64.29% | 34.39% |
Return on Invested Capital (Normalized) | 9.05% | 33.14% | 29.53% |
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
---|---|---|---|---|---|
GWW
| W.W. Grainger Inc | Psdwrfld | Pshkqg | $46.5 Bil | |
FERG
| Ferguson PLC | Wfrgwynm | Ngywhp | $42.8 Bil | |
FAST
| Fastenal Co | Xttxnsjl | Lfblz | $38.0 Bil | |
WSO
| Watsco Inc Class A | Tgbmvtnxp | Mddvfz | $19.3 Bil | |
WSO.B
| Watsco Inc Shs -B- Conv.at any time | — | Jqqjq | $19.1 Bil | |
POOL
| Pool Corp | — | Gshw | $14.2 Bil | |
CNM
| Core & Main Inc Class A | — | Rgzxzm | $11.6 Bil | |
IDDWF
| Indutrade AB | — | Qrqwc | $9.6 Bil | |
MSM
| MSC Industrial Direct Co Inc Class A | Hbdnpwg | Ymzbx | $5.1 Bil |