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The most recent earnings release WESCO International, Inc.’s (NYSE:WCC) announced in December 2018 confirmed that the business experienced a strong tailwind, leading to a double-digit earnings growth of 39%. Below, I’ve laid out key growth figures on how market analysts view WESCO International’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ outlook for next year seems rather muted, with earnings growing by a single digit 7.1%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 18% compared to today’s earnings, and finally hitting US$281m by 2022.
While it is helpful to understand the rate of growth year by year relative to today’s figure, it may be more beneficial to gauge the rate at which the company is rising or falling every year, on average. The benefit of this method is that we can get a bigger picture of the direction of WESCO International’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 9.0%. This means, we can assume WESCO International will grow its earnings by 9.0% every year for the next few years.
For WESCO International, there are three fundamental aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is WCC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether WCC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WCC? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.