WESCO International, Inc. (NYSE:WCC)

CAPS Rating: 5 out of 5

The Company is a provider of electrical construction products and electrical and industrial maintenance, repair and operating supplies in the United States, Canada, Mexico, Guam, the United Kingdom, Nigeria, United Arab Emirates and Singapore.

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Member Avatar danapu2000 (35.40) Submitted: 4/2/2014 2:55:40 PM : Outperform Start Price: $87.27 WCC Score: -10.13

Cc

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Member Avatar line70day (< 20) Submitted: 8/4/2013 3:23:46 PM : Outperform Start Price: $86.11 WCC Score: -13.52

Gaap reported sales were 13% higher than prior yr Q $1.67B Esp came in at $1.25 the earnings complied by the S&P capital 1Q averaged $ 1.35 per share Gaap esp $1.25 for Q2 were 8.7% 60 base points better than prior yr Q net margin was 3.4% 10 base points worse than prior yr Q

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Member Avatar foolfully (62.66) Submitted: 11/21/2012 4:16:52 PM : Outperform Start Price: $63.12 WCC Score: -10.17

50

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Member Avatar ll00 (20.89) Submitted: 9/11/2009 10:28:53 AM : Outperform Start Price: $26.96 WCC Score: +119.59

i go with the flow

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Member Avatar notzia (71.14) Submitted: 8/7/2009 9:04:05 AM : Outperform Start Price: $24.60 WCC Score: +141.42

WESCO International, Inc. (WCC) is a provider of electrical construction products and electrical and industrial maintenance, repair and operating supplies (MRO). The company serves approximately 115,000 customers globally, offering more than 1,000,000 products from more than 23,000 suppliers utilizing automated, electronic procurement and inventory replenishment system.

The analysis presented is based on a price of $24.27.

The EPS has shown solid growth over the last eight years, with a compounded annual rate of 42%. Although the free cash flow has been positive throughout this time, it has fluctuated substantially; the last four years have been far better than the earlier four. In general, the return on equity (ROE) has been increasing from the 14% evidenced in 2001 to the 39% found in 2007; in 2008, it fell to the more pedestrian 29%.

Before I look at the valuations, I look at three indicators of financial safety. For this stock, all three are quite good. The Altman Z is 7.59; below 1.8 is risky, above 3 is the safe range. The Piotroski F is 8; 2 or below indicates caution, while 8 or 9 indicates that the stock is expected to rise within the next year. The Sloan accrual is -7.23; 5 or higher is high risk, while -5 or lower is excellent.

I use more than one valuation method to gauge intrinsic value; the first three all provide at least a reasonable margin of safety (MOS). The first three are standards in the valuation literature. The estimate based on Graham’s formula was $133 (82% MOS). The Earnings Power Value (value of the firm) was estimated, on a per share bases, to be $45 (46% MOS); while I like EPV to be at least 50%, I considered this close enough not to be a barrier to recommendation. The Discounted Cash Flow estimate valued the stock at $146 (83% MOS).

The last two were based on a spreadsheet found on the AAII website; these are designed to mimic Buffett’s valuation methodology. One is based on projecting EPS growth 10 years into the future based on past EPS growth; I discount the resulting valuation to reflect the price at which the stock will realize a compounded earnings (including dividends when applicable) return of 15%. Based on this method the target purchase needs to be below $30, and at the current price there is a 19% MOS.

The second is based on estimating EPS growth through the sustainable growth rate. The per-share projected book value is estimated by taking the previous year’s book value, adding EPS and subtracting dividends (when applicable). The projected EPS is estimated by multiplying the projected book value by the average Return on Equity, and the projected dividend is estimated by multiplying the projected EPS by the average payout ratio. I then discount the resulting valuation to reflect the price at which the stock will realize a compounded earnings return of 15%. Based on this method the target purchase needs to be below $40, and at the current price there is a 39% MOS.

To ascertain that the price is attractive to me, I take one more thing into consideration. At the current price, would I expect an immediate 15% return on my investment (ROI) based on earnings and dividends? In this, the EPS represents about 15.6% of the share price by itself (there is no dividend yield to add in).

Based on value and safety, I think WCC has good investment potential. The only flaw that emerged from my analysis is the earnings power value, which in the context of the whole analysis was close enough not to disqualify the company from investment consideration.

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Member Avatar TourPhare (37.21) Submitted: 5/28/2009 12:32:02 PM : Outperform Start Price: $25.72 WCC Score: +101.06

Low priced. Target at $30

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Member Avatar bitterpete (92.25) Submitted: 11/8/2008 9:39:45 AM : Outperform Start Price: $18.33 WCC Score: +241.83

Yes, earnings missed estimates and debt is a bit higher than Fools like to see. But, trading at 3.5 times earnings and off 150% of the 52 week high, this stock might be one of the best bargins out there. They are solidly managed and have a strong international presence. Yes, they are likely to run a little lean as construction stalls, but long term, I see this as a 4 or 5 bagger.

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Member Avatar trendsJohn (< 20) Submitted: 6/14/2008 3:05:46 PM : Outperform Start Price: $43.14 WCC Score: +41.99

multiple technical positive signals

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Member Avatar NoTouch5Yr (99.14) Submitted: 5/22/2008 5:09:50 PM : Outperform Start Price: $43.64 WCC Score: +42.68

As with all my picks: A very attractive P/E, excellent EPS growth rate and high five year growth prospects.

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Member Avatar Smiley81 (< 20) Submitted: 4/29/2008 10:50:29 AM : Outperform Start Price: $36.90 WCC Score: +78.22

$70+/share

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Member Avatar Sillitoe (73.59) Submitted: 1/3/2008 11:52:49 PM : Outperform Start Price: $38.50 WCC Score: +72.23

value, good financials, expanding, worldwide growth, protection, share buy back

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Member Avatar OHL2011 (46.36) Submitted: 1/2/2008 4:55:13 PM : Outperform Start Price: $39.50 WCC Score: +68.29

VALUE and insider buying

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Member Avatar Patrick6k (72.03) Submitted: 10/31/2007 1:54:51 PM : Outperform Start Price: $46.43 WCC Score: +44.46

Wesco Intl Inc. is a distributor of a vast portfolio of electrical products. Investing in this stock is a matter of common sense in my opinion. With the intense expansion projects occurring with the big refineries along with the global modernization occurring in lesser-developed countries, Wesco stands to make windfall profits for decades to come.

They have a very solid management crew, and a globally established business, and it's a boring business to boot. We may be looking at an industrial version of Home Depot, and with the amount of inside ownership that Wesco has, their big wigs must have a similar belief.

Wall Street analysts estimate 19% annualized growth over the next 5 years. In my heart of hearts, I think that's conservative, but, being the value hawk I am with my investment dollars, I used a 12% annualized return. Even with a lower earnings growth rate, I still place the intrinsic value of these shares at around $74-$75. So, this looks like a good buying opportunity to me.

Go Long,

Fool On!!!

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Member Avatar aaroger (83.03) Submitted: 7/22/2007 5:34:50 PM : Underperform Start Price: $59.70 WCC Score: -3.65

69

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Member Avatar antigenics1 (73.33) Submitted: 10/13/2006 10:14:26 AM : Outperform Start Price: $68.20 WCC Score: -33.34

watch list

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Member Avatar jersey1010 (< 20) Submitted: 10/9/2006 1:00:45 PM : Outperform Start Price: $67.11 WCC Score: -32.78

"We believe the acquisition of Communications Supply is a significant step in the evolution of Wesco's strategy to diversify its end-market base and reduce the cyclicality of its earnings," wrote Woodworth, who maintains an "Overweight" rating on shares.

Woodworth expects Wesco to continue to make acquisitions, focusing on high-margin companies that could fuel expansion into new geographic locations, markets and products.

The company previously said it might make more acquisitions in the fragmented low voltage and data communications supply industry.

Separately, Raymond James analyst Sam Darkatsh reiterated an "Outperform" rating on Wesco and $74 target price, and said the acquisition looks attractive financially and strategically.

Results 1 - 16 of 16

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