AEIS Advanced Energy Industries Inc

WESCO International Inc. (WCC) is set to report first-quarter fiscal 2014 results on Apr 24. Last quarter, it posted a 4.6% negative surprise. Let’s see how things are shaping up for this announcement.

Growth Factors This Past Quarter

WESCO posted dismal fourth quarter 2013 results with both the top and bottom lines missing the Zacks Consensus Estimate. The sequential revenue decline of 2.7% was attributable to reduction in organic sales and unfavorable currency movements (weaker Canadian to U.S. dollar conversion). Despite the dismal earnings report, WESCO’s business is being driven by strengthening end markets and an integrated supply model, which increase efficiencies for its customers.

Moreover, WESCO recently acquired Hazmasters, Inc., a Canadian company that distributes safety products in the industrial, construction, commercial, institution and government markets. The acquisition will enhance WESCO’s safety business and customer base, which in turn will strengthen its Canadian footprint. Also, the acquisition is expected to be accretive to WESCO’s earnings and will likely add 5 cents per share to the company’s profit in the first year of operation.

For the first quarter, WESCO expects year-over-year revenue increase of at least 0-3%. Gross margin is expected to be in the range of 20.8-21% while operating margin is expected to be in the range of 5.3-5.5%. The tax rate is expected to be in the 26-28% range.

Earnings Whispers?

Our proven model does not conclusively show that WESCO International will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: That is because the Most Accurate estimate stands at $1.06 while the Zacks Consensus Estimate is higher at $1.08. That is a difference of –1.85%.

Zacks Rank: WESCO International’s Zacks Rank #3 (Hold) when combined with a negative ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies, which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Advanced Energy Industries, Inc. (AEIS), with Earnings ESP of +10.00% and a Zacks Rank #1 (Strong Buy).

E-Commerce China Dangdang Inc. (DANG), with Earnings ESP of +33.33% and a Zacks Rank #1.

ON Semiconductor Corp. (ONNN), with Earnings ESP of +6.67% and a Zacks Rank #1. 

 
ADV ENERGY INDS (AEIS): Free Stock Analysis Report
 
E-COMMRC CH-ADR (DANG): Free Stock Analysis Report
 
ON SEMICON CORP (ONNN): Free Stock Analysis Report
 
WESCO INTL INC (WCC): Free Stock Analysis Report
 
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