Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Wesco Are Up Today

By Lou Whiteman - Aug 13, 2020 at 12:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings came in better than expected despite a lot of potential distractions in the quarter.

What happened

Shares of Wesco International (WCC 2.09%) climbed 9% higher on Thursday morning, after the electrical component distributor reported better-than-expected quarterly results. The industrial supplier had to juggle a large merger and the impact of COVID-19 but still produced solid results.

So what

Before markets opened Thursday, Wesco reported second-quarter adjusted earnings of $1.04 per share on revenue of $2.1 billion, beating analyst expectations for $0.66 per share in earnings on revenue of $1.9 billion.

The company late in the quarter completed its $4.5 billion acquisition of cabling and electrical wire provider Anixter International, creating a global electrical and data communications equipment powerhouse. Net sales fell 2.9% in the quarter compared with 2019, in part due to COVID-19-related weakness, but the impact was not as bad as analysts had feared.

Electrical wiring at a construction site

Image source: Getty Images.

"The second quarter will prove to be a watershed period in our history, as we successfully closed on our industry-shaping merger of Wesco and Anixter," CEO John J. Engel said in a statement. "Against the challenges imposed by the global pandemic, the extraordinary determination of our Wesco and Anixter associates to execute a flawless day one closing, just five months after signing the merger agreement, was impressive."

Now what

The second half of the year is going to be focused on integration, with Wesco pledging to deploy Anxiter's margin improvement program over the broader portfolio. There are still substantial risks with the company attempting to do an integration during a period of economic uncertainty, but Wesco has a strong balance sheet with more than $800 million in total liquidity.

Shares of Wesco are still down 16% on the year, but the stock has more than doubled from lows hit in mid-March. It's going to be a choppy rest of 2020, but it appears Wesco is heading in the right direction.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends Wesco International. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

WESCO International, Inc. Stock Quote
WESCO International, Inc.
$140.24 (2.09%) $2.87

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.