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This small-cap stock has outperformed the S&P 500 index in the past 6 months

This small-cap stock has outperformed the S&P 500 index in the past 6 months

A need for a large logistics and supply chain network in the era of global trade is almost a given, and this is where Wesco International (NYSE: WCC) enters the scene in providing such services.

Shareholders of the company have possibly had reasons to smile as in the past six months, the stock has gained 10.40%, while the S&P 500 index has lost also exactly 10.40%.  

Furthermore, in the latest earnings report, the company produced $4.93 billion of revenue, a 22% increase year-on-year (YoY), beating estimates by $310 million. Similarly, earnings per share (EPS) were $3.63, beating estimates by $1.39.

WCC Chart and analysis 

In general, shares of the company have had a steady 2022, which cannot be said of many stocks in the S&P 500. Trading sessions in May have seen significant volume increases, and the stock has shot over the November resistance above $141. 

Currently, shares trade above all daily Simple Moving Averages, perhaps indicating an accumulation stage where the stock might again test the above $141 level. 

WCC  20-50-200 SMA lines chart. Source. data. See more stocks here.

Additionally, analysts on Wall Street deem the shares a strong buy, predicting that the average next 12 months price will reach $183.75, representing a potential increase of 38.90% from the current trading price of $132.29.

Wall Street WCC analysts’ price targets for WCC. Source: TipRanks

Abundance of growth

Equally important, the company acquired a global distributor of communication and security products in Anixter, in June 2020. This acquisition could help the company in its cross-selling synergies and efforts for complementary services, which is expected to improve margins.   

Wesco realized synergies and expectations Source: Investor presentation

Additionally, the company’s management expects sales for the full year 2022 to increase by 12% to 15%, which would enable them to grow their margin from 7.3% to 7.6%. This all could translate into $1.54 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).  

2022 outlook by Management Source: Investor presentation 

Rounding it all up

In essence, Wesco has gone through some significant changes in the past few years, acquiring various companies that could fit nicely in their portfolio of offerings.

It seems as if it will be more difficult to judge the company’s historical performance due to these acquisitions, as the new sum of parts has yet to perform for an extended period of time. 

Nevertheless, if the company keeps growing its sales and margins, significant growth can still be in the cards for WCC. Recently, the company made the Oppenheimer list of companies likely to outperform in 2022, which could give investors more peace of mind.    

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

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