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1. Company Snapshot

1.a. Company Description

WESCO International, Inc.provides business-to-business distribution, logistics services, and supply chain solutions in the United States, Canada, and internationally.It operates through three segments: Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS), and Utility and Broadband Solutions (UBS).


The EES segment supplies products and supply chain solutions, including electrical equipment and supplies, automation and connected devices, security, lighting, wire and cable, and safety, as well as maintenance, repair, and operating (MRO) products.This segment also offers contractor solutions, direct and indirect manufacturing supply chain optimization programs, lighting and renewables advisory services, and digital and automation solutions.The CSS segment operates in the network infrastructure and security markets.


This segment sells products directly to end-users or through various channels, including data communications contractors, security, network, professional audio/visual, and systems integrators.It also provides safety and energy management solutions.The UBS segment offers products and services to investor-owned utilities; public power companies; and service and wireless providers, broadband operators, and contractors.


This segment's products include wire and cable, transformers, transmission and distribution hardware, switches, protective devices, connectors, conduits, pole line hardware, racks, cabinets, safety and MRO products, and point-to-point wireless devices.This segment also offers various service solutions, including fiber project management, high and medium voltage project design and support, pre-wired meters and capacitor banks, meter testing and metering infrastructure installation, personal protective equipment dielectric testing, and tool repair, as well as emergency response, storage yard, materials, and logistics management.The company was founded in 1922 and is headquartered in Pittsburgh, Pennsylvania.

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1.b. Last Insights on WCC

WESCO International's recent performance was driven by strong Q3 earnings, with net sales reaching a record $6.2 billion, up 12.9% year-over-year. The company's data center sales surged ~60% year-over-year to $1.2 billion, fueled by demand in the global data center and network infrastructure markets. Its Communications & Security Solutions segment is driving growth. The company raised its 2025 outlook for sales growth, adjusted EBITDA, and adjusted EPS. JPMorgan maintains an Overweight rating, citing a price target of $225.

1.c. Company Highlights

2. WESCO's Q3 Earnings: Strong Growth Across Segments

WESCO's Q3 2025 earnings report delivered robust results, with organic sales growth of 12% year-over-year, driven by 18% growth in Communications and Security Solutions (CSS), 12% in Electrical and Electronic Solutions (EES), and 3% growth in Utility and Broadband Solutions (UBS). Total data center sales reached a record $1.2 billion, up 60% year-over-year, representing 19% of total Q3 sales. Adjusted EPS grew 9.5% year-over-year to $3.92, beating estimates of $3.75. Adjusted EBITDA margin was 6.8%, down 50 basis points year-over-year, but up 10 basis points sequentially.

Publication Date: Nov -03

📋 Highlights
  • Data Center Sales Surge:: Total data center sales hit $1.2 billion (Q3), up 60% YoY, representing 19% of Q3 sales, with trailing 12-month sales near $4 billion.
  • Outperformed Organic Growth Forecasts:: 2025 full-year organic sales growth raised to 8-9% (from 5-7%), driven by 12% EES, 18% CSS, and 3% UBS growth in Q3.
  • Adjusted EPS Growth Accelerated:: 9.5% YoY and 16% sequential increase in adjusted EPS, with full-year guidance raised to $13.10-$13.60.
  • Margin Expansion and Cost Savings:: $540M preferred stock redemption reduced costs by $32M annually ($0.65/share), while Q4 expects 30 bps margin improvement from rebates and operating leverage.

Segment Performance

The company's segments demonstrated strong growth, with EES delivering 12% organic sales growth, driven by mid-teens growth in construction and mid-single-digit growth in industrial and OEM. CSS organic sales grew 18%, driven by over 50% growth in WESCO data center solutions. UBS organic sales increased 3%, led by high single-digit growth in investor-owned utilities and over 20% growth in broadband. The growth across segments was fueled by various industries, including construction, with growth in water-wastewater, hospitals, and public transit.

Data Center Sales and Margin Expansion

The data center market remains strong, driven by robust demand from end-user customers, with WESCO poised to continue outperforming the market. The company's trailing 12-month data center sales are close to $4 billion. The company expects mid-single-digit organic sales growth in 2026, with continued strength in electrical markets, a return to full-year growth in utility, and mid-teens growth in data center. WESCO expects 30 basis points of margin expansion in Q4, driven by supplier volume rebates, gross margin actions, and operating leverage.

Valuation and Outlook

With a P/E Ratio of 19.89 and an EV/EBITDA of 9.17, the market has priced in a certain level of growth for WESCO. The company's revised 2025 outlook expects organic sales growth of 8-9%, up from 5-7% previously, and raised its adjusted EPS range to $13.10-$13.60. Analysts estimate next year's revenue growth at 5.6%. The company's top priority is investing organically in the business to drive growth and operational efficiency, with a digital transformation on track, scaling up deployment in 2026.

Return on Investment and Cash Flow

WESCO's ROIC is 7.71%, and ROE is 13.17%, indicating a decent return on investment. The company's free cash flow yield is 1.98%, with an expected free cash flow of $400-$500 million in 2025, implying a range of approximately 60-75% of adjusted net income. The redemption of the $540 million Series A preferred stock in June reduced financing costs, with an estimated annualized benefit of $32 million or $0.65 per diluted share.

3. NewsRoom

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Wesco Declares Quarterly Dividend on Common Stock

Dec -01

Source: prnewswire.com

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Seth Klarman's Strategic Moves: Union Pacific Corp Takes Center Stage with 7.43% Portfolio Share

Nov -13

Source: gurufocus.com

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Don't Overlook Wesco International (WCC) International Revenue Trends While Assessing the Stock

Nov -04

Source: zacks.com

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WESCO Q3 Earnings Beat Estimates, Sales Increase Y/Y, Shares Rise

Nov -04

Source: zacks.com

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Bessemer Group Inc. Acquires 818 Shares of WESCO International, Inc. $WCC

Nov -03

Source: defenseworld.net

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WESCO International, Inc. (WCC) Q3 2025 Earnings Call Transcript

Oct -30

Source: seekingalpha.com

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Here's What Key Metrics Tell Us About Wesco International (WCC) Q3 Earnings

Oct -30

Source: zacks.com

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Wesco International (WCC) Tops Q3 Earnings and Revenue Estimates

Oct -30

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.84%)

6. Segments

Electrical & Electronic Solutions

Expected Growth: 2.8%

WESCO International's Electrical & Electronic Solutions segment growth of 2.8% is driven by increasing demand for industrial automation, renewable energy, and electrification of transportation. Additionally, growth in data center construction, 5G network deployments, and IoT adoption are contributing to the segment's expansion.

Communications & Security Solutions

Expected Growth: 3.2%

WESCO International's Communications & Security Solutions segment growth of 3.2% is driven by increasing demand for network infrastructure, cybersecurity, and IoT solutions. Additionally, the rising need for data centers, cloud computing, and 5G network deployments is fueling growth. Furthermore, government initiatives and investments in smart cities and public safety projects are also contributing to the segment's growth.

Utility & Broadband Solutions

Expected Growth: 2.5%

WESCO International, Inc.'s Utility & Broadband Solutions segment growth of 2.5% is driven by increasing demand for reliable and efficient energy infrastructure, government initiatives for grid modernization, and rising adoption of 5G and fiber-optic networks. Additionally, the segment benefits from WESCO's strong relationships with utility companies and its ability to provide comprehensive solutions for their infrastructure needs.

7. Detailed Products

Electrical and Electronic Solutions

WESCO International, Inc. offers a wide range of electrical and electronic solutions, including electrical distribution and control products, lighting and lighting controls, and data communications and security products.

Industrial and MRO Supplies

The company provides a broad range of industrial and MRO (maintenance, repair, and operations) supplies, including abrasives, adhesives, and sealants, as well as tools and equipment.

Communications and Security Solutions

WESCO International, Inc. offers a variety of communications and security solutions, including network infrastructure, wireless communications, and security systems.

Utility and Broadband Solutions

The company provides a range of utility and broadband solutions, including transmission and distribution products, and broadband infrastructure products.

Data and Broadband Solutions

WESCO International, Inc. offers data and broadband solutions, including data center infrastructure, broadband infrastructure, and network infrastructure.

8. WESCO International, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

WESCO International, Inc. operates in a industry where substitutes are available, but they are not a significant threat to the company's business. The score is 3, indicating a medium level of threat.

Bargaining Power Of Customers

WESCO International, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. The score is 2, indicating a low level of bargaining power.

Bargaining Power Of Suppliers

WESCO International, Inc. has a moderate level of dependence on its suppliers, but it has also diversified its supplier base to mitigate this risk. The score is 3, indicating a medium level of bargaining power.

Threat Of New Entrants

WESCO International, Inc. operates in an industry with high barriers to entry, making it difficult for new entrants to join the market. The score is 2, indicating a low level of threat.

Intensity Of Rivalry

WESCO International, Inc. operates in a highly competitive industry, with many established players competing for market share. The score is 4, indicating a high level of intensity.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 54.21%
Debt Cost 8.45%
Equity Weight 45.79%
Equity Cost 14.23%
WACC 11.10%
Leverage 118.39%

11. Quality Control: WESCO International, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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MSC Industrial Direct Co

A-Score: 6.1/10

Value: 4.2

Growth: 3.7

Quality: 6.0

Yield: 8.0

Momentum: 6.5

Volatility: 8.3

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Yield: 2.0

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Yield: 6.0

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WESCO

A-Score: 5.2/10

Value: 4.5

Growth: 7.9

Quality: 5.6

Yield: 1.0

Momentum: 7.5

Volatility: 5.0

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Core & Main

A-Score: 5.0/10

Value: 4.0

Growth: 8.4

Quality: 5.4

Yield: 0.0

Momentum: 7.0

Volatility: 5.0

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A-Score: 4.8/10

Value: 2.8

Growth: 6.9

Quality: 5.9

Yield: 3.0

Momentum: 3.0

Volatility: 7.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

273.36$

Current Price

273.36$

Potential

-0.00%

Expected Cash-Flows