Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at WESCO (NYSE: WCC) and its peers.
Supply chain and inventory management are themes that grew in focus after COVID wreaked havoc on the global movement of raw materials and components. Maintenance and repair distributors that boast reliable selection and quickly deliver products to customers can benefit from this theme. While e-commerce hasn’t disrupted industrial distribution as much as consumer retail, it is still a real threat, forcing investment in omnichannel capabilities to serve customers everywhere. Additionally, maintenance and repair distributors are at the whim of economic cycles that impact the capital spending and construction projects that can juice demand.
The 8 maintenance and repair distributors stocks we track reported a mixed Q1. As a group, revenues missed analysts’ consensus estimates by 0.6%.
In light of this news, share prices of the companies have held steady as they are up 2.9% on average since the latest earnings results.
WESCO (NYSE: WCC)
Based in Pittsburgh, WESCO (NYSE: WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.
WESCO reported revenues of $5.34 billion, flat year on year. This print exceeded analysts’ expectations by 1.8%. Despite the top-line beat, it was still a slower quarter for the company with a significant miss of analysts’ adjusted operating income estimates and a miss of analysts’ EPS estimates.
"After returning to growth in the fourth quarter of 2024, we are pleased to build on our positive sales momentum to start the year with 6% organic growth in the first quarter. This performance was sparked by 70% growth in total data center sales and high single digit growth in both our Broadband and OEM businesses. Consistent with the fourth quarter, our first quarter sales growth was partially offset by continued weakness in our utility business, as expected. With that said, our positive momentum is building to start the second quarter with preliminary April sales per workday up 7% versus prior year. Our opportunity pipeline continues at a record level, bid activity levels remain very strong, and backlog is growing. Gross margin was relatively stable on a sequential basis versus the fourth quarter, and we've begun to see an initial improvement in Communication and Security Solutions as expected," said John Engel, Chairman, President, and CEO.
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $162.77.
Read our full report on WESCO here, it’s free.
Best Q1: Global Industrial (NYSE: GIC)
Formerly known as Systemax, Global Industrial (NYSE: GIC) distributes industrial and commercial products to businesses and institutions.
Global Industrial reported revenues of $321 million, flat year on year, outperforming analysts’ expectations by 4.6%. The business had an incredible quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Global Industrial delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 17.3% since reporting. It currently trades at $25.97.
Is now the time to buy Global Industrial? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Distribution Solutions (NASDAQ: DSGR)
Founded in 1952, Distribution Solutions (NASDAQ: DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries.
Distribution Solutions reported revenues of $478 million, up 14.9% year on year, falling short of analysts’ expectations by 3.8%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
As expected, the stock is down 2.7% since the results and currently trades at $25.35.
Read our full analysis of Distribution Solutions’s results here.
MSC Industrial (NYSE: MSM)
Founded in NYC’s Little Italy, MSC Industrial Direct (NYSE: MSM) provides industrial supplies and equipment, offering vast and reliable selection for customers such as contractors
MSC Industrial reported revenues of $891.7 million, down 4.7% year on year. This print came in 0.8% below analysts' expectations. More broadly, it was a mixed quarter as it also produced a solid beat of analysts’ EBITDA estimates but a slight miss of analysts’ organic revenue estimates.
MSC Industrial had the slowest revenue growth among its peers. The stock is down 4.2% since reporting and currently trades at $76.02.
Read our full, actionable report on MSC Industrial here, it’s free.
DXP (NASDAQ: DXPE)
Founded during the emergence of Big Oil in Texas, DXP (NASDAQ: DXPE) provides pumps, valves, and other industrial components.
DXP reported revenues of $476.6 million, up 15.5% year on year. This result was in line with analysts’ expectations. More broadly, it was a mixed quarter as its performance in some other areas of the business was disappointing.
DXP achieved the fastest revenue growth among its peers. The stock is down 3.1% since reporting and currently trades at $85.99.
Read our full, actionable report on DXP here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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