WESCO International Inc.
) is set to report first-quarter fiscal 2014 results on Apr 24.
Last quarter, it posted a 4.6% negative surprise. Let's see how
things are shaping up for this announcement.
Growth Factors This Past Quarter
WESCO posted dismal fourth quarter 2013 results with both the
top and bottom lines missing the Zacks Consensus Estimate. The
sequential revenue decline of 2.7% was attributable to reduction
in organic sales and unfavorable currency movements (weaker
Canadian to U.S. dollar conversion). Despite the dismal earnings
report, WESCO's business is being driven by strengthening end
markets and an integrated supply model, which increase
efficiencies for its customers.
Moreover, WESCO recently acquired Hazmasters, Inc., a Canadian
company that distributes safety products in the industrial,
construction, commercial, institution and government markets. The
acquisition will enhance WESCO's safety business and customer
base, which in turn will strengthen its Canadian footprint. Also,
the acquisition is expected to be accretive to WESCO's earnings
and will likely add 5 cents per share to the company's profit in
the first year of operation.
For the first quarter, WESCO expects year-over-year revenue
increase of at least 0-3%. Gross margin is expected to be in the
range of 20.8-21% while operating margin is expected to be in the
range of 5.3-5.5%. The tax rate is expected to be in the 26-28%
Our proven model does not conclusively show that WESCO
International will beat estimates this quarter. That is because a
stock needs to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
Negative Zacks ESP:
That is because the Most Accurate estimate stands at $1.06 while
the Zacks Consensus Estimate is higher at $1.08. That is a
difference of -1.85%.
WESCO International's Zacks Rank #3 (Hold) when combined with a
negative ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5
(Sell-rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revisions
Other Stocks to Consider
Here are some other companies, which you may want to consider
as our model shows that they have the right combination of
elements to post an earnings beat this quarter:
Advanced Energy Industries, Inc.
), with Earnings ESP of +10.00% and a Zacks Rank #1 (Strong
E-Commerce China Dangdang Inc.
), with Earnings ESP of +33.33% and a Zacks Rank #1.
ON Semiconductor Corp.
), with Earnings ESP of +6.67% and a Zacks Rank #1.
ADV ENERGY INDS (AEIS): Free Stock Analysis
E-COMMRC CH-ADR (DANG): Free Stock Analysis
ON SEMICON CORP (ONNN): Free Stock Analysis
WESCO INTL INC (WCC): Free Stock Analysis
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