Wesco International Intrinsic Value Calculation – WESCO Executing Well, But Limited Short-Term Upside Potential
December 27, 2023
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WESCO ($NYSE:WCC) International, Inc. is a leading provider of electrical, industrial, and communications maintenance, repair, and operating (MRO) supplies, construction materials, and advanced supply chain management and logistics services. The company has been executing well, delivering strong financial results in recent years. Despite this, there may be limited short-term upside potential for investors due to a number of factors. The MRO market has matured, limiting the potential for organic growth in the near future.
In addition, WESCO has historically relied on M&A activity to drive its growth, but opportunities for acquisitions are fewer than in past years. The company’s stock price has already appreciated significantly, thus there may not be much room for further appreciation.
Additionally, the sector is subject to heightened volatility due to trade tensions and geopolitical uncertainty. Due to these factors, WESCO’s short-term upside potential may be limited, despite the fact that it has been executing well in recent years. That being said, the company remains well-positioned to capitalize on any organic and acquisition opportunities which may arise in the future.
Stock Price
WESCO INTERNATIONAL opened on Tuesday at $176.6 and closed at $176.3, a minimal rise of 0.1% from the previous day’s closing price of $176.2. Despite the small increase in stock price, analysts and investors have limited short-term upside potential for the company.
Additionally, WESCO has recently experienced a slowdown in industrial production, which has made it harder for the company to generate significant returns from its investments in the short-term. Overall, despite solid execution and positive long-term prospects, the consensus among analysts is that WESCO’s stock price is unlikely to make any major gains in the near future. Given its current market position, investors may want to wait for more substantial returns before investing in WESCO INTERNATIONAL in the short-term. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Wesco International. More…
| Total Revenues | Net Income | Net Margin |
| 22.47k | 785.07 | 3.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Wesco International. More…
| Operations | Investing | Financing |
| 845.56 | -287.57 | -146.62 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Wesco International. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 15.17k | 10.29k | 95 |
Key Ratios Snapshot
Some of the financial key ratios for Wesco International are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 29.7% | 63.3% | 6.6% |
| FCF Margin | ROE | ROA |
| 3.3% | 19.0% | 6.1% |
Analysis – Wesco International Intrinsic Value Calculation
GoodWhale recently conducted an analysis of WESCO INTERNATIONAL‘s wellbeing. Our proprietary Valuation Line calculated the fair value of WESCO INTERNATIONAL share to be around $143.3. However, WESCO INTERNATIONAL stock is currently being traded at $176.3, which is overvalued by 23.1%. Going forward, GoodWhale suggests investors to be cautious while making decisions regarding WESCO INTERNATIONAL stock. More…
Peers
The Company’s primary competitors are Fastenal Co, MSC Industrial Direct Co Inc, and Addtech AB.
– Fastenal Co ($NASDAQ:FAST)
The company’s market cap is $27.97B as of 2022 and its ROE is 28.04%. The company is engaged in the distribution of industrial and construction supplies.
– MSC Industrial Direct Co Inc ($NYSE:MSM)
MSC Industrial Direct Co, Inc. engages in the distribution of metalworking and maintenance, repair, and operations (MRO) products and services. It operates through the following segments: Metalworking Solutions Group, MRO Solutions Group, and Fluid Power & Automation Solutions Group. The Metalworking Solutions Group segment offers cutting tools, measuring instruments, tooling components, abrasives, and machine tools. The MRO Solutions Group segment comprises of products used to maintain, repair, and operate facilities and equipment. The Fluid Power & Automation Solutions Group segment provides fluid power components and systems, and automation and control products. The company was founded by Martin Schwartz in 1941 and is headquartered in Melville, NY.
MSC Industrial Direct Co Inc has a market cap of 4.71B as of 2022 and a Return on Equity of 22.14%. The company engages in the distribution of metalworking and maintenance, repair, and operations (MRO) products and services. It operates through the following segments: Metalworking Solutions Group, MRO Solutions Group, and Fluid Power & Automation Solutions Group. The Metalworking Solutions Group segment offers cutting tools, measuring instruments, tooling components, abrasives, and machine tools. The MRO Solutions Group segment comprises of products used to maintain, repair, and operate facilities and equipment. The Fluid Power & Automation Solutions Group segment provides fluid power components and systems, and automation and control products.
– Addtech AB ($LTS:0QI7)
Addtech AB is a Swedish company that provides technology solutions for industrial customers. The company has a market cap of 36 billion as of 2022 and a return on equity of 28.17%. Addtech’s solutions include products and services for automation, motion control, and fluid power. The company operates in four segments: Automation, Motion, Fluid Power, and Industrial Supplies. Addtech employs approximately 3,700 people and has sales offices in Europe, North America, and Asia.
Summary
WESCO International is a leading electrical distributor and service provider that has been performing well over the past several months.
However, short-term returns for investors may be limited due to factors such as a slow economic recovery and market uncertainty. WESCO’s earnings have improved steadily with strong organic growth in both sales and profits. The company’s balance sheet remains healthy with plenty of liquidity and manageable debt levels. WESCO also has a strong competitive edge in the electrical distribution industry and enjoys an impressive market share. The company has also been making strategic investments in initiatives such as digital transformation, which are expected to pay off over the longer term.
