Wesco Clears Buy Point On Continued Revenue & Earnings Strength Industrial-supplies distribution specialist Wesco International (NYSE: WCC) appears poised for big revenue and earnings gains. The stock rallied to a new high Tuesday as the broader market also advanced.

With supply-chain issues increasingly making headlines, industrial supply distribution specialist Wesco International (NYSE: WCC) appears poised for big earnings gains.

The Pittsburgh-based company offers products and services to a number of industry verticals, including automotive, electronics, broadband communications, data communications, maintenance, security, and others.

The company strives to distinguish itself as a supply-chain service provider. It works with customers from various industries to streamline supply-chain operations.

Analysts expect earnings per share of $8.80 this year, a year-over-year gain of 71%. Wall Street pegged next year's earnings at $10.11 per share, up 15%

The company is slated to report its third-quarter on November 4, with analysts eyeing income of $2.56 per share on revenue of $4.61 billion. Wesco beat analysts' views in the past two quarters, according to data compiled by MarketBeat.

Revenue growth accelerated in the past three quarters, from 93% to 120%. Earnings grew at double-digit rates in the past two quarters.

In the most recent quarter, reported on August 6, Wesco earned $2.64, $0.67 better than the $1.97 analysts expected.

The stock has held up better than the broader market recently. With a market capitalization of $6.1 billion, it's a mid-cap, so the appropriate comparison is the S&P 400 mid-cap index.

Wesco has returned 52.62% year-to-date, while the S&P 400 is up 15.73%.

The company's operations are organized into three strategic business units: Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS), and Utility & Broadband Solutions (UBS).

Results in the most recent quarter reflect the impact of Wesco's acquisition of Anixter in a deal valued at $4.5 billion. The transaction was completed in June 2020.

Prior to the acquisition, Anixter was a global provider of products and services in the security, communications, and networking verticals, among other categories. Its strategic business units were similar to the current organization at Wesco.

Wesco's second-quarter highlights include:

• EES net sales of $1.9 billion, compared to $1.0 billion for the second quarter of 2020, an increase of 84.3%. In addition to the impact from the merger, the increase reflects double-digit sales growth in Wesco's construction, original equipment manufacturer, and industrial businesses.
• CSS net sales of $1.5 billion, compared to $341.5 million for the second quarter of 2020, an increase of 327.9%. In addition to the impact from the merger, the increase reflects sales growth in the company's security solutions and network infrastructure businesses.
• UBS net sales of $1.2 billion, compared to $701.9 million for the second quarter of 2020, an increase of 72.6%. Along with the impact of the merger, the increase reflects sales growth in Wesco's utility, broadband, and integrated supply businesses.

In the company's earnings call, CEO John Engel noted that sales and margin momentum growth was partly due to to the economic cycle recovery this year, as well as the broader footprint made possible by the acquisition.

Looking ahead, the company expects strong growth in the second half of the year, in alignment with Wall Street expectations.

"We've had an exceptionally strong first half of the year and the outlook calls for sequential growth in the back half," Engel said in the earnings conference call.

The company also raised its full-year outlook for sales, margin, and profitability for the second time. It now expects sales to increase 10% to 13%, adjusted EBITDA margin to expand to between 6.1% and 6.4%, and adjusted EPS to grow to a range of $8.40 to $8.80.

The stock cleared a consolidation on August 5, and rallied 6% to a high of $119.92 on August 12 before retreating to find support near its 21-day moving average.

It rallied to a new high of $123.27% Tuesday in heavier-than-normal volume. With that price action, it cleared a five-week consolidation. Technically, it's in buy range, but the current market uncertainty makes a buy risky at this time. At this juncture, it's better to keep this stock on a watch list, and wait for better broad-market strength before jumping in.