WESCO’s (NYSE:WCC) Q2 Sales Beat Estimates

Electrical supply company WESCO (NYSE:WCC) announced better-than-expected revenue in Q2 CY2025, with sales up 7.7% year on year to $5.9 billion. Its non-GAAP profit of $3.39 per share was 0.8% above analysts’ consensus estimates.

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"We continued to build on our positive sales momentum in the first half of 2025 and outperformed the market with our leading portfolio of products, services, and solutions. Sales growth is accelerating, with organic sales up 6% in the first quarter, 7% in the second quarter, and preliminary July sales per workday up approximately 10% year-over-year. The second quarter performance was led by 17% organic growth in CSS and 6% organic growth in EES. Total data center sales eclipsed $1B in the quarter, setting a new mark, and were up 65% versus the prior year. And, on an encouraging note, our Utility business has begun to show signs of improvement as sales to investor-owned utilities returned to growth in the second quarter. Our Wesco opportunity pipeline continues to grow, bid activity levels remain very strong, and backlog is at record levels, increasing both year-over-year and sequentially across all three business segments. Adjusted EBITDA margin was up 90 basis points sequentially as we generated strong operating leverage on higher topline sales and stable gross margin. All in all, we're off to a good start in the first half of 2025 and we are building on that momentum for the remainder of the year," said John Engel, Chairman, President, and CEO.

Company Overview

Based in Pittsburgh, WESCO (NYSE:WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, WESCO grew its sales at an incredible 21.8% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. WESCO’s recent performance shows its demand has slowed significantly as its revenue was flat over the last two years.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, WESCO’s organic revenue averaged 1.3% year-on-year growth. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, WESCO reported year-on-year revenue growth of 7.7%, and its $5.9 billion of revenue exceeded Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to grow 3.7% over the next 12 months. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below the sector average.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

WESCO was profitable over the last five years but held back by its large cost base. Its average operating margin of 5.5% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, WESCO’s operating margin rose by 1.7 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q2, WESCO generated an operating margin profit margin of 5.5%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

WESCO’s EPS grew at an astounding 19.4% compounded annual growth rate over the last five years. Despite its operating margin improvement during that time, this performance was lower than its 21.8% annualized revenue growth, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

We can take a deeper look into WESCO’s earnings to better understand the drivers of its performance. A five-year view shows WESCO has diluted its shareholders, growing its share count by 15.7%. This dilution overshadowed its increased operating efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For WESCO, its two-year annual EPS declines of 12.4% mark a reversal from its (seemingly) healthy five-year trend. We hope WESCO can return to earnings growth in the future.

In Q2, WESCO reported adjusted EPS at $3.39, up from $3.21 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects WESCO’s full-year EPS of $12.34 to grow 21.1%.

Key Takeaways from WESCO’s Q2 Results

It was encouraging to see WESCO beat analysts’ revenue expectations this quarter. We were also happy its organic revenue narrowly outperformed Wall Street’s estimates. On the other hand, its EBITDA slightly missed. Overall, this print was mixed, and shares traded down 2.6% to $206.74 immediately after reporting.

Big picture, is WESCO a buy here and now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.