WESCO International Inc.WCC is set to report third-quarter 2015 results on Oct 22. Last quarter, it posted a 10.89% negative surprise. Let's see how things are shaping up for this announcement.
Factors to Consider
WESCO posted reported weak second-quarter results with both the top line and the bottom line missing the respective Zacks Consensus Estimate.
Earnings increased 9% sequentially but decreased 24.1% year over year. The year-over-year decline was due to persistent weakness in the industrial market and Canada, foreign exchange headwinds and a sluggish seasonal start in the non-residential construction space.
However, initiatives undertaken in the second quarter to streamline and simplify the business are expected to improve profitability in the second half of the year.
Acquisitions will remain an important part of Wesco's growth strategy and boost both earnings and revenues in the near term. Moreover, the company will augment its existing product lines and expand globally, thereby improving its overall market position. Additionally, its cost streamlining initiative will likely boost margins in the to-be reported quarter.
Our proven model does not conclusively show that WESCO International will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP 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: The Most Accurate estimate stands at $1.22 while the Zacks Consensus Estimate is pegged higher at $1.23. This translates to a difference of -0.81%.
Zacks Rank #4 (Sell): We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some 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:
- Pandora Media, Inc. P with an Earnings ESP of +50.00% and a Zacks Rank #1 (Strong Buy)
- Agilent Technologies Inc. A with an Earnings ESP of +2.13% and a Zacks Rank #2 (Buy)
- T-Mobile US, Inc. TMUS with an Earnings ESP of +3.13% and a Zacks Rank #2
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.