WESCO International, Inc. (NYSE: WCC) stock opened on a positive note today and rose over 1.35% on January 3rd, 2017 (as of 11:12 AM EST; Source: Google finance). The group has posted the fourth quarter results as per the guidance of the company given in the third quarter earnings call. Wesco has reaffirmed the full year 2016 outlook.
Additionally, Wesco management has given the outlook for 2017 and expects modest improvement in the end markets in 2017. Wesco is investing for the future while executing the growth initiatives and maintaining the cost and cash management discipline. The company considers themselves well-positioned to take the benefit of the potential tax, regulatory, and budget changes associated with the new administration in the United States and is not anticipating any significant impact on the business in 2017. Therefore, in 2017 WCC expects the sales will be in the range of flat to up 4%, the earnings per diluted share are expected to be in the range of $3.60 to $4.00, and the free cash flow generation is expected to be at least 90% of net income.
Wesco continues to implement its One WESCO strategy to grow its sales above the market sales growth, grow its profitability, generates strong cash flow and to enhance the shareholder’s value. WCC’s acquisition pipeline remains robust, and the company sees great ongoing opportunities to strengthen the electrical core and broaden the portfolio of products and services.
But, WCC expects 2% to 3% decline in sales for FY16, while the adjusted earnings per diluted share are expected to be in the range of $3.75 to $3.90. The free cash flow generation is expected to be at least 125% of the adjusted net income.
Zacks Investment Research has downgraded the WCC stock from a “buy” rating to a “hold” rating. This is due to the weakness in commodity markets and foreign exchange risk, which will remain as major problem creator. Moreover, the supplier concentration, a significant debt load, and limited liquidity are longer-term problems for the company.
In addition, Emerald Acquisition Ltd. has cut its stake in shares WCC by 20.6% during the third quarter 2016. KeyCorp analysts have decreased their FY2017 earnings per share (EPS) estimates for WCC and now expects the EPS to be $3.80, down from their previous forecast of $4.05.
WCC stock has already risen 52.36% in the last one year (Source: Google Finance) while investors could consider booking profits in the stock.