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) | 13.84 | 25.90 | 33.17 |
Price/Book Value | 1.86 | 14.54 | 11.15 |
Price/Sales | 0.43 | 2.84 | 5.19 |
Price/Cash Flow | 10.32 | 20.62 | 28.83 |
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 | Mybmpmz | Shszjz | $46.5 Bil | |
FERG
| Ferguson PLC | Tmlslbqr | Fnkjdvg | $42.6 Bil | |
FAST
| Fastenal Co | Yhrwsvxfm | Zhbt | $38.0 Bil | |
WSO.B
| Watsco Inc Shs -B- Conv.at any time | — | Fbkkn | $19.1 Bil | |
WSO
| Watsco Inc Class A | Ptgzgldd | Qfvsf | $19.1 Bil | |
POOL
| Pool Corp | — | Htmf | $14.1 Bil | |
CNM
| Core & Main Inc Class A | — | Rqjqys | $11.6 Bil | |
IDDWF
| Indutrade AB | — | Fqy | $9.3 Bil | |
MSM
| MSC Industrial Direct Co Inc Class A | Csypmwjr | Cmgpzyg | $5.2 Bil |