Wesco Earnings: 2024 Sales and Earnings Guidance Cut Due to Softer US Utility and Broadband Spending

Shares of Wesco sold off sharply on Aug. 1 after the narrow-moat-rated industrial distributor reported second-quarter revenue and adjusted EPS that fell short of FactSet consensus estimates. Furthermore, management lowered full-year revenue, adjusted EBITDA margin, and adjusted EPS guidance as US utility and broadband market demand remains soft amid inventory destocking and project delays. Management is still targeting $0.8 billion-$1.0 billion of free cash flow in 2024, unchanged from prior guidance. Over the longer term, we still think Wesco’s utility and broadband solutions segment can deliver mid-single-digit growth, and we’re optimistic growth will return next year. With no change to management’s 2024 free cash flow guidance and our long-term outlook intact, we’ve maintained our $197 per share fair value estimate.