As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the maintenance and repair distributors industry, including WESCO (NYSE:WCC) and its peers.
Supply chain and inventory management are themes that grew in focus after COVID wreaked havoc on the global movement of raw materials and components. Maintenance and repair distributors that boast reliable selection and quickly deliver products to customers can benefit from this theme. While e-commerce hasn’t disrupted industrial distribution as much as consumer retail, it is still a real threat, forcing investment in omnichannel capabilities to serve customers everywhere. Additionally, maintenance and repair distributors are at the whim of economic cycles that impact the capital spending and construction projects that can juice demand.
The 8 maintenance and repair distributors stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility, and while some maintenance and repair distributors stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.4% since the latest earnings results.
Weakest Q2: WESCO (NYSE:WCC) Based in Pittsburgh, WESCO (NYSE:WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.
WESCO reported revenues of $5.48 billion, down 4.6% year on year. This print fell short of analysts’ expectations by 1.5%. Overall, it was a disappointing quarter for the company with a miss of analysts’ earnings estimates.
"Our second quarter results were somewhat below our expectations for a low single-digit decline in reported sales against a continued mixed and multi-speed economic environment." said John Engel, Chairman, President and CEO.
Unsurprisingly, the stock is down 13% since reporting and currently trades at $152.20.
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Best Q2: DXP (NASDAQ:DXPE) Founded during the emergence of Big Oil in Texas, DXP (NASDAQ:DXPE) provides pumps, valves, and other industrial components.
DXP reported revenues of $445.6 million, up 4.1% year on year, outperforming analysts’ expectations by 2.7%. The business had a stunning quarter with an impressive beat of analysts’ earnings estimates.
DXP pulled off the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 1.1% since reporting. It currently trades at $48.28.
Distribution Solutions (NASDAQ:DSGR) Founded in 1952, Distribution Solutions (NASDAQ:DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries.
Distribution Solutions reported revenues of $439.5 million, up 16.3% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a miss of analysts’ earnings estimates.
Interestingly, the stock is up 1.6% since the results and currently trades at $34.05.
MSC Industrial (NYSE:MSM) Founded in NYC’s Little Italy, MSC Industrial Direct (NYSE:MSM) provides industrial supplies and equipment, offering vast and reliable selection for customers such as contractors
MSC Industrial reported revenues of $979.4 million, down 7.1% year on year. This result met analysts’ expectations. Aside from that, it was a disappointing quarter as it failed to impress in other areas of the business.
MSC Industrial had the slowest revenue growth among its peers. The stock is flat since reporting and currently trades at $78.71.
Fastenal (NASDAQ:FAST) Founded in 1967, Fastenal (NASDAQ:FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally.
Fastenal reported revenues of $1.92 billion, up 1.8% year on year. This print met analysts’ expectations. More broadly, it was a disappointing quarter as it also produced a narrow beat of analysts’ earnings estimates.
The stock is up 5.9% since reporting and currently trades at $67.96.
This content was originally published on Stock Story
