Tags: Wesco | M&A | sales | WCC

Wesco Banking On M&A for Sales

By    |   Wednesday, 14 March 2012 09:19 AM

Distributor Wesco International (WCC) is banking on a mergers & acquisitions (M&A) strategy to drive sales. The outfit has quickly snapped up five companies, adding $460 million in annual revenues.

The Pittsburgh firm distributes electrical, industrial and construction supplies nationally and internationally. Sales are growing strongly as factory output rises. Investors have noticed, and the stock is up 22 percent year-to-date.

For fourth quarter 2011, Wesco reported total sales of $1.5 billion, up 19.4 percent. Net income for the quarter was $1.12 per share, up from 72 cents last year.

For the full year, Wesco reported sales of $6.1 billion, up 21 percent from $5.1 billion in 2010. Net income for 2011 was $3.96 per share, up from $2.50.

Wesco CEO John Engel said in a statement that the company has “posted six consecutive quarters of double-digit organic sales growth and five consecutive quarters of earnings per share growth of at least 40 percent versus prior year.”

For 2012, Wall Street’s consensus estimate has steadily risen to $4.71 per share. For 2013, the consensus estimate is $5.44.

Rebound continues

Future acquisitions will drive growth, according to Wesco. The company also has focused on expanding its product lines. S&P sees growth in Wesco’s sector, as global markets gradually rebound in 2012. Sector wide, double-digit earnings rises and stock price increases lie ahead, S&P predicts.

Analysts are bullish on Wesco. Of the 17 analysts followed by Thomson/First Call, 11 have strong buy recommendations and five have buys, with only one hold.

KeyBanc Capital Market analysts have a buy rating, citing Wesco’s ability to execute on its strategic initiatives.

The company next reports on April 26.

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