Why WESCO International's Shares Popped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of industrial supplier WESCO International (NYS: WCC) rose as much as 15% today, after the company released earnings and announced an acquisition.

So what: Third quarter revenue rose 4.8%, to $1.66 billion, which was slightly below expectations of $1.73 billion. The company said net income was $63.4 million, or $1.25 per share, a penny ahead of expectations.

What really got investors excited was the announcement of a $1.16 billion deal to buy EECOL Electric Corp. The company has about $900 million in sales, and is expected to add $1.00 per share to earnings.

Now what: This is a big addition to WESCO's earnings, and the market is clearly excited about the potential. Management said it would finance the acquisition with a new term loan so it won't be dilutive to shareholders, but it will add leverage to the balance sheet. Even after the pop, shares are only trading at 12 times forward earnings, so I think shares have further to run once earnings expectations for next year are adjusted higher.

Interested in more info on WESCO International? Add it to your watchlist by clicking here.

The article Why WESCO International's Shares Popped originally appeared on Fool.com.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.