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Electrical equipment manufacturer stocks wesco international (New York Stock Exchange: WCC) Shares fell 23% by 11:40 a.m. ET Tuesday after the company reported major misses on both sales and profits this morning.
Heading into the fiscal year-end, analysts had expected Wesco to report adjusted earnings of $3.87 per share on revenue of $5.6 billion. Instead, Wesco reported revenue of just $5.5 billion and earnings per share of just $2.65, adjusted for one-time items.
Wesco International’s sales and profits
Sales in the fourth quarter of 2023 were down 2%, a disappointing end to the year when full-year sales were up 4.5%. Earnings calculated in accordance with Generally Accepted Accounting Principles (GAAP) were slightly worse than the adjusted numbers above. GAAP earnings decreased 37% year over year to just $2.45 per share.
On the positive side, as I mentioned, sales increased by 4.5% for the year. However, the significant decline in profits in the fourth quarter also affected full-year results. For the full year 2023, Wesco reported earnings of $13.54 per share, down 12% from last year’s $15.33 per share.
Is Wesco stock a sell?
So Wesco had a bad quarter. Will I be able to sell the stock?
necessarily. As an example, CEO John Engel said the company remains on “long-term secular growth trends” in end markets such as utilities, data centers, security, network infrastructure and industrial markets. ing. For this reason, management believes that sales will increase again in 2024, increasing by 1% to 4%. On the other hand, free cash flow (FCF) will continue to improve. Wesco said he generated more than $400 million in FCF in 2023. In 2024 he expects to have positive cash profits of $800 million to $600 million.
At the midpoint, that means Wesco stock is selling for less than 11 times this year’s free cash flow. Free cash flow is expected to increase 75% this year. Admittedly, the company’s long-term growth projections are much lower than that, at just 10% per year over the next five years. But to me at least, 11x FCF seems like a very fair price to pay for a company that grows even 10% and pays a 0.8% dividend.
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Rich Smith has no position in any stocks mentioned. The Motley Fool has a position in and recommends Wesco International. The Motley Fool has a disclosure policy.
Why Wesco International’s stock plummeted 23% The original article was published by The Motley Fool.
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