Wesco International's Q1 Earnings: Missed EPS, Beat Revenue, Increased Free Cash Flow Outlook

KeyBanc's Ken Newman raised their price target on Wesco International (NYSE: WCC) by 7.9% from $190 to $205 on 2024/05/03. The analyst maintained their Strong Buy rating on the stock.

Newman's decision to increase the price target on Wesco International comes after the company reported its first-quarter earnings on May 2. According to Newman, the company "outperformed" in the quarter, and management's guidance for the full year was better than expected. The analyst noted that Wesco International's increase in free cash flow outlook to $800 million to $1 billion, along with other positive factors, makes the company an appealing option for investors.

In the first quarter of 2024, Wesco International reported earnings per share (EPS) of $2.30, missing the Zacks Consensus Estimate of $2.46 and Q1 2023's EPS of $3.75 by 38.7%. However, the company's revenue of $5.35 billion beat the Zacks Consensus Estimate by 0.70%, although it was 3.1% lower than Q1 2023's revenue of $5.52 billion. Adjusted EBITDA margin also decreased by 120 basis points year-over-year to 6.4%. The company generated free cash flow of $731 million in the first quarter.

For the full year 2024, Wesco International's management provided guidance of EPS ranging from $13.75 to $15.75, revenue between $21.9 billion and $22.6 billion, and adjusted EBITDA margin of 7.5% to 7.9%. The company also increased its free cash flow outlook to $800 million to $1 billion.

In a statement, Wesco International's Chairman, President & CEO John Engel expressed satisfaction with the company's performance, noting that sales, quoting, bid activity levels, and backlog remain healthy. He also highlighted the record free cash flow generation in the first quarter and the proceeds from the sale of the Wesco Integrated Supply business, which will support the company's capital allocation strategies and pursuit of accretive acquisitions.

Apart from Ken Newman, other analysts also updated their ratings on Wesco International on May 3. Deane Dray of RBC Capital lowered their price target by 2.3% from $176 to $172 but maintained a Hold rating on the stock. Christopher Glynn of Oppenheimer, on the other hand, raised their price target by 5.3% from $190 to $200 and maintained a Buy rating.

Currently, 83.3% of top-rated analysts rate Wesco International as a Strong Buy or Buy, while 16.7% consider it a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Wesco International will deliver earnings per share (EPS) of $14.84 in the upcoming year. If this forecast holds true, it would represent a 21% increase in EPS compared to the previous year.

Following the company's latest quarterly report, Wesco International's stock price has increased by 4.7%. Year-over-year, the stock has risen by 33.1%, outpacing the S&P 500's 25.2% growth.

KeyBanc analyst Ken Newman, who raised the price target on Wesco International, is ranked in the top 7% of Wall Street analysts by WallStreetZen. Newman specializes in the Energy and Industrials sectors and boasts an average return of 21.2% with a win rate of 83.3%.

Wesco International Incorporated is a B2B distribution, logistics, and supply chain solutions provider in the United States and internationally. The company operates through its EES segment, which supplies electrical equipment and supplies, automation and connected devices, security, lighting, wire and cable, safety, and maintenance and repair products and solutions. Additionally, Wesco International operates in the network infrastructure and security markets through its CSS segment, and offers products and services to utilities and wireless providers through its UBS segment. The company was founded in 1922 and is headquartered in Pittsburgh, PA.

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