Wesco International Inc. (WCC) is set to report third-quarter fiscal 2014 results on Oct 23. Last quarter, the company posted a negative earnings surprise of 3.01%. Let us see how things are shaping up for this announcement.

Factors to Consider This Past Quarter

Wesco International’s second quarter 2014 earnings of $1.29 cents per share missed the Zacks Consensus Estimate by 4 cents. However, earnings increased 32.5% sequentially and 3% on a year-over-year basis. Improved sales volumes in Canada, acquisition pipeline, organic sales growth and better pricing led to the year-over-year increase.

Similar to other distribution companies, Wesco generates growth through acquisitions. However, the company's current debt level rules out large deals in the foreseeable future. Instead, management might have to leverage its existing branch network to compete with rivals like Sonepar, Graybar and Rexel.

For the third quarter of 2014, Wesco expects year-over-year revenue increase of at least 5%-7%. Gross margin is expected to be approximately 20.6% while operating margin is expected to be in the range of 6.3%-6.5%. The tax rate is expected to be roughly 28%.

Earnings Whispers?

Our proven model does not conclusively show that Wesco will beat earnings 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.

Zacks ESP:Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.51. Hence, the difference is 0.00%.

Zacks Rank:Wesco currently carries a Zacks Rank #3 (Hold). 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.

Other Stocks to Consider

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

Facebook Inc. (FB) has an Earnings ESP of +6.25% and a Zacks Rank #2.

Seagate Technology Public Limited Co. (STX) has an earnings ESP of +2.40% and a Zacks Rank #3.

Mercadolibre, Inc. (MELI) has an earnings ESP of +6.25% and a Zacks Rank #3.

Read the Full Research Report on WCC
Read the Full Research Report on STX
Read the Full Research Report on FB
Read the Full Research Report on MELI


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