Why Wesco International (WCC) is poised to beat earnings estimates again

If you’re looking for a stock that has a solid history of beating earnings estimates and is well-positioned to continue the trend in its next quarterly report, you should consider Wesco International (WCC). This company, which operates in the Zacks Electronics – Parts Distribution industry, shows potential for another earnings beat.

This maker of electrical and industrial maintenance supplies and building materials has had a strong run of beating earnings estimates, especially considering its two previous reports. The average surprise for the last two quarters was 21.21%.

For the most recent quarter, Wesco International was expected to report earnings of $2.56 per share, but instead it reported earnings of $2.74 per share, representing a surprise of 7.03%. The consensus estimate for the prior quarter was $1.95 per share when it actually delivered $2.64 per share, representing a surprise of 35.38%.

Price and EPS surprise

Given this earnings history, Wesco International’s latest estimates are higher. In fact, the company’s Zacks Earnings ESP (expected surprise) is positive, which is a great sign of earnings growth, especially when you combine this metric with a nice Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks in this combination, the number of stocks that beat the consensus could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimates to the Zacks Consensus Estimates for the quarter; The Most Accurate Estimate is the Zacks Consensus version, which is defined in terms of change. The idea is that analysts reviewing their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and other consensus participants had previously predicted.

Wesco International currently has an Earnings ESP of +5.88%, which suggests that analysts have recently become optimistic about the company’s earnings prospects. This positive Earnings ESP combined with the stock’s Zacks Rank #3 (Hold) indicates that another rally is likely just around the corner. We expect the company’s next earnings report to be published on February 15, 2022.

For the Earnings ESP metric, remember that a negative value reduces its predictive power; however, a negative earnings ESP does not mean a loss of earnings.

Many companies end up beating consensus EPS estimates, but that may not be the only basis for their stock’s rise. On the other hand, some stocks may hold even if they fall short of the consensus price.

For this reason, it is very important to check a company’s earnings ESP before its quarterly release to increase the chances of success. Use our Earnings ESP filter to find the best stocks to buy or sell before they report.

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