WESCO's (WCC) Q4 Earnings Miss Estimates, Revenues Up Y/Y
Zacks Investment Research | Feb 02, 2020 09:23PM ET
WESCO International, Inc. (NYSE:WCC) reported fourth-quarter 2019 adjusted earnings of $1.32 per share, reflecting an improvement of 4.5% year over year. However, the bottom line missed the Zacks Consensus Estimate by 0.7%.
Net sales of $2.099 billion improved 4.4% year over year. The top line was driven by the company’s solid momentum across all end-markets, especially, utility and CIG markets.
Further, the company witnessed improved performance in the United States where sales were up 4% from the year-ago quarter. In Canada, sales were up 2% year over year. Further, international sales were up 13% from the year-ago quarter.
Additionally, acquisition benefits, which contributed 0.8%, drove sales. The company’s organic sales in the reported quarter improved 3.9% from the prior-year quarter.
However, headwinds related to foreign exchange fluctuations impacted fourth-quarter net sales by 0.3%. Moreover, the figure lagged the Zacks Consensus Estimate of $2.103 billion.
Following lower-than-expected fourth-quarter earnings, shares of the company have plunged 4.4%.
Further, WESCO has lost 10.7% over a year against the WESCO International, Inc. Quote
Operating Details
Gross margin was 18.6% in the reported quarter, which contracted 80 basis points (bps) compared with the year-ago quarter. This was due to unfavorable business mix and hike in supplier prices.
Selling, general and administrative expenses (SG&A) increased 2% on a year-over-year basis.
WESCO’s operating margin came in at 4%, contracting 50 bps from the prior-year quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2019, cash & cash equivalents were $150.9 million, up from $138.2 million as of Sep 30, 2019. Long-term debt in fourth-quarter 2019 was $1.26 billion compared with $1.35 billion at the end of previous quarter.
Additionally, WESCO generated $107.7 million of cash from operations in the reported quarter compared with $125.4 million of cash generated at the end of the third quarter.
Free cash flow in the quarter was $93.9 million.
Guidance
For first-quarter 2020, WESCO expects sales between 2% to 5%. The Zacks Consensus Estimate is pegged at $2.02 billion.
Operating margin is expected between 3.4-3.6%.
For 2020, WESCO expects sales growth between 0% and 4%. The Zacks Consensus Estimate for 2019 sales is pegged at $8.53 billion.
Earnings are now anticipated to be in the range of $5.10-$5.70 per share. The Zacks Consensus Estimate is pegged at $5.42 per share.
Operating margin is projected between 4.1% to 4.4%.
Zacks Rank & Key Picks
WESCO currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Itron, Inc. (NASDAQ:ITRI) , NetEase, Inc. (NASDAQ:NTES) and Five9, Inc. (NASDAQ:FIVN) . All the three stocks carry a Zacks Rank #2 (Buy). You can see Original post
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