Earnings Miss: WESCO International, Inc. Missed EPS By 11% And Analysts Are Revising Their Forecasts
There's been a major selloff in WESCO International, Inc. (NYSE:WCC) shares in the week since it released its yearly report, with the stock down 23% to US$147. Revenues were in line with forecasts, at US$22b, although statutory earnings per share came in 11% below what the analysts expected, at US$13.54 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for WESCO International
Following the latest results, WESCO International's eleven analysts are now forecasting revenues of US$22.9b in 2024. This would be a satisfactory 2.1% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 4.0% to US$14.42. In the lead-up to this report, the analysts had been modelling revenues of US$23.3b and earnings per share (EPS) of US$16.81 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.
The consensus price target fell 8.8% to US$179, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values WESCO International at US$200 per share, while the most bearish prices it at US$165. This is a very narrow spread of estimates, implying either that WESCO International is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the WESCO International's past performance and to peers in the same industry. It's pretty clear that there is an expectation that WESCO International's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.1% growth on an annualised basis. This is compared to a historical growth rate of 24% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.3% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than WESCO International.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of WESCO International's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for WESCO International going out to 2026, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 2 warning signs for WESCO International (1 doesn't sit too well with us!) that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
