Wesco International (WCC) - Zacks #1 Rank Top Performers

When Wesco International Inc. (WCC) announced its third-quarter report in late October, the company was a Zacks #3 Rank ('hold'). But since then, not only has WCC moved to a Zacks #1 Rank ('strong buy'), but it also ended Wednesday's ho-hum session as one of the top performers.

But it wasn't the strong third-quarter performance that sparked today's share price gain. Instead, it was the announcement that WCC would be acquiring TVC Communications.

Shares advanced by approximately 5.8% today, while the Dow lost more than 15 points and the S&P could only manage a quarter-point gain. Volume eclipsed 1 million shares, compared to the daily average of a little more than 842,000.

In addition to its enviable Zacks Rank, we also have a longer-term "Outperform" recommendation for WCC. There are several positive factors that we like about the company, including its strong market position, the turnaround in the industrial and utility markets and its global account model. And let's not forget that its earnings estimates are moving in the right direction.

Wesco International, whose primary operating entity is Wesco Distribution, is a leading distributor of electrical construction products and electrical and industrial maintenance, repair and operating (MRO) supplies, and is the nation's largest provider of integrated supply services. Major markets include commercial and industrial firms, contractors, government agencies, educational institutions, telecommunications businesses and utilities.

WCC is the only company from the electrical parts dist industry on today's Zacks #1 Rank List.

Buying TVC Communications

The value of the deal is approximately $246.5 million. TVC Communications is a leading distributor of broadband communications infrastructure products serving the cable, telecommunications and satellite industries.

According to Wesco, TVC strengthens its data communications platform while also expanding into previously untapped international growth markets. The acquisition is expected to be immediately accretive, and should boost Wesco's 2011 diluted earnings per share by approximately $0.30 or more.

The deal should close before the end of the year.

Earnings Estimates for Wesco International

While the acquisition helped WCC become a top performer on Wednesday, it is not the reason why the company has the best Zacks Rank possible. The catalyst of that stems from a strong third quarter report in late October.

Earnings per share came in at 74 cents in the quarter, which surpassed the year-ago result of 63 cents, excluding items. The result also beat the Zacks Consensus Estimate of 65 cents by nearly 14%. This marked the fourth straight quarter with a positive earnings surprise.

Consolidated net sales benefited from solid momentum across the business, gaining practically 15% year over year to $1.325 billion from $1.152 billion.

For more on the quarter, read: WESCO Beats, Prospects Improving.

In the wake of this strong quarterly report, all 17 estimates for this year were revised higher. The Zacks Consensus Estimate of $2.49 per share is up 6.9% in the past 30 days from $2.33.

Meanwhile, analysts expect next year's profit of $3.18 per share to grow by nearly 28% from this year. The Zacks Consensus Estimate is up 4.6% in 30 days on 17 upward revisions out of 19 total estimates.

 
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