WESCO International, Inc. (WCC): what the price requires
At today's price, WESCO International, Inc. (WCC) is priced for +19.6% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/WCC
Headline
| Field | Value |
|---|---|
| Ticker | WCC |
| Company | WESCO International, Inc. |
| Current price | $330.20/sh |
| Composition | United States 74% / Canada 14% / Other International 12% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 1.9% |
| Operating margin today | 5.1% |
| Margin compression implied | -3.2pp |
| Implied growth | 19.6% |
| Multiple paid | 19x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 10% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.8pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.29σ |
| cohort percentile (of 225 peers) | 40 |
| sustained it ~5 years at this level | 38% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.89x | 5 | expensive |
| Earnings | 2.17x | 3 | expensive |
| Relative | 1.32x | 5 | expensive |
| Growth | 1.10x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.7%); the inversion above states its own rate.
Per-Model Detail (n=16)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $20.60 | 16.03x | yes | FCF base $0.2B, growth 11% (input: historical growth), terminal g 4.0%, WACC 7.7%, 6yr projection |
| DCF Exit Multiple | Growth | $342.51 | 0.96x | yes | Exit EV/EBITDA: 13.4x / 15.4x / 17.4x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $250.83 | 1.32x | yes | P/E 18x (static sector reference · 2026-04), scenarios: 14.9x / 18.0x / 21.1x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $147.55 | 2.24x | yes | BV/sh $103.19, ROE (TTM) 13.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $174.89 | 1.89x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $298.91 | 1.10x | yes | Rev $24.2B, growth 11% (input: historical growth; tapered), Terminal P/S: 0.6x / 0.7x / 0.8x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $168.72 | 1.96x | yes | EPS $14.06, growth 12% (input: historical EPS growth), PEG=2.03 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $124.97 | 2.64x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.26B × (1−22%) / WACC 7.7% → EPV (no growth) |
| Residual Income | Asset | $180.75 | 1.83x | yes | BV $103.19 + 5yr PV of (ROE (TTM) 13.2% − Kₑ 9.3%) × BV; BV grows 8.6%/yr |
| Graham Number | Asset | $180.67 | 1.83x | yes | √(22.5 × EPS $14.06 × BVPS $103.19) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $228.59 | 1.44x | yes | EBITDA $1.49B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $0.01 | 33020.00x | yes | FCF $215.6M / Kₑ 9.3% — zero-growth perpetuity (excluded from median) |
| SBC-Adj FCF Yield | Earnings | $0.01 | 33020.00x | yes | SBC-adj FCF $0.17B (FCF $0.22B − SBC $0.05B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | $381.13 | 0.87x | yes | EPS $14.06 × (8.5 + 2×11.9%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $26.36 | 12.53x | yes | BV $103.19 × (ROIC 2.0% / WACC 7.7%) |
| P/Sales Sector | Relative | $1224.61 | 0.27x | yes | Revenue $24.25B × sector P/S 2.5x |
| PEG Fair Value | Relative | $251.43 | 1.31x | yes | EPS $14.06 × (PEG 1.5 × growth 11.9% (input: historical EPS growth)) → PE 17.9x |
| Earnings Yield | Earnings | $152.00 | 2.17x | yes | EPS $14.06 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $5.9b |
| Net debt / NOPAT (after-tax) | 6.30x |
| Net debt / operating income (pre-tax) | 4.92x |
| Share count CAGR (buyback) | -1.3% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- WESCO is a distributor, a business that earns thin margins on enormous volume, and the swing factor is mix: data center demand drove first-quarter 2026 sales to a record $6.1 billion, up 14%, with data center sales up roughly 70% to $1.4 billion and now 24% of the total.
- The biggest risk is the price itself, not the business: at $365 the asset-value, earnings-power and peer-multiple methods all read the stock as richly valued, and only the cash-flow methods that credit continued compounding reach the price, so the bet is on durable double-digit growth holding.
- What to watch is whether the secular tailwind sustains: backlog rose 22% to a record and management raised full-year adjusted EPS guidance to $15 to $17 with sales of roughly $24.9 to $25.6 billion.
Bull Case
Distribution is a deceptively simple business to describe and a hard one to value, and WESCO sits at the sharp end of why. A distributor buys electrical, communications and utility products and resells them, earning a thin margin on each transaction; the economics work through scale, inventory turns, and the breadth of products it can put in front of a customer. WESCO organizes this across two reportable segments, Electrical and Electronic Solutions and Communications and Security Solutions, and the EES segment alone did $8,955.5 million in net sales in 2025, up 6.7% from $8,391.7 million. The reason the stock has re-rated is that one end market changed the mix: data center construction. The 10-K names data centers explicitly among the projects its products serve, and in the first quarter of 2026 data center sales rose roughly 70% to $1.4 billion, lifting the segment to 24% of company sales.
The operating leverage in a distributor shows up when volume outruns the cost base, and the first quarter showed it. Record sales of $6.1 billion, up 14%, marked a third straight quarter of double-digit growth, and adjusted EBITDA rose 25% to $389 million with margin expanding 60 basis points to 6.4% of sales. For a business that lives on single-digit margins, sixty basis points of expansion on a 14% larger revenue base is meaningful, and it dropped through to cash: free cash flow of $213 million represented 128% of adjusted net income. A distributor that converts more than its earnings into cash is generating real money it can use to pay down debt rather than feed working capital.
The forward signal is the backlog, and it points up. Backlog rose 22% to a new record, which management attributes to secular growth trends and a cross-selling program that puts more of the catalog in front of each customer. On the strength of that visibility WESCO raised its full-year adjusted EPS outlook to $15 to $17 and guided sales to roughly $24.9 to $25.6 billion, with data center sales projected to grow more than 20% for the year. The bull case is that the company has positioned itself as a primary supplier to the single largest construction tailwind in industrials, and that the backlog converts that position into earnings the market is already paying for.
Bear Case
The cleanest way to see the bear case is to watch the valuation methods disagree. Run the full set against today's price and a clear pattern emerges: the methods grounded in assets, in current earnings power, and in what peers fetch all read the stock as richly valued, some at more than twice the price the demonstrated numbers support. Only the cash-flow methods that project continued compounding reach $365, and they get there by assuming the recent growth rate persists. When the conservative, backward-anchored methods cluster well below the price and only the optimistic forward method touches it, the honest read is that the price embeds a durability assumption the static frames cannot underwrite. The earnings-power lens in particular sits far below the price, which is the market saying the current profit stream alone does not justify the multiple; the growth has to keep coming.
The trouble with that bet is the nature of the business doing the growing. A distributor's volume is downstream of construction and capital spending, and the same secular wave lifting WESCO can recede. The company's own risk language is blunt about the squeeze points: it warns it may be unable to pass incremental costs through to customers in a timely manner without hurting price competitiveness or margins, and that customers may reduce or defer purchases on softening demand. The data center concentration that powers the bull case is the same concentration that worries the bear, because 24% of sales now ride on one capital-spending cycle that hyperscalers control, not WESCO.
Then there is the balance sheet, which limits the margin for error. WESCO carries roughly $5.9 billion of net debt, on the order of four and a half times trailing operating income. That is manageable while sales compound and free cash flow runs above net income, and the company is using that cash to deleverage. But leverage cuts both ways: in a downturn, distribution volumes fall faster than the fixed cost base, operating income compresses, and the same debt that looked moderate at peak earnings looks heavier against trough earnings. The 10-K also flags that large, complex projects and multi-site customer programs expose the company to heightened execution and contractual risk, precisely the kind of work the data center boom generates. The price is paying for the boom to last; the bear thesis is that a distributor is a cyclical wearing a secular-growth costume.
Valuation
At today's price the market is betting on durability, and the valuation methods make that unusually explicit. Strip the business to its parts and the picture is a distributor earning operating margins in the low-to-mid single digits, which is normal for the model; what is not normal is paying a premium multiple for it. The price requires the recent double-digit growth to persist, because the conventional value lenses do not reach it on the current earnings stream.
The disagreement across method families is the whole story. The asset-value methods, built off book value and the spread of return over the cost of capital, land well below the price. The earnings-power lens, which capitalizes the current profit stream with no growth, sits further below still, near a third of the price, which is the market's way of saying the static business is worth far less than the quote. Peer multiples land below the price as well, around two-thirds of it. Only the cash-flow methods that project the growth forward reach $365, and they do so by extrapolating the present momentum. That is not a contradiction in the methods; it is the signal. When only the forward-growth family touches the price, the premium is a bet on durable compounding that the backward-looking frames structurally cannot price. The exit-multiple cash-flow method and the growth-adjusted earnings approaches landing near the price both rely on the same fuel: that data center demand keeps the top line growing at the recent pace.
Solvency is where the durability bet meets the balance sheet. WESCO carries roughly $5.9 billion of net debt, about four and a half times trailing operating income, which is serviceable while volume compounds and free cash flow runs above net income, and the company is directing that cash toward paying it down. The most decisive number for the value question is not any single method's output. It is the gap between what the current earnings power supports and what the price asks, a gap that closes only if the backlog, up 22% to a record, keeps converting into the growth the raised guidance implies.
Catalysts
The first-quarter 2026 report, released in early May, was the catalyst that re-rated the stock, and it was a clean beat with a raise. Record sales of $6.1 billion grew 14%, the third consecutive quarter of double-digit growth, with data center sales up roughly 70% to $1.4 billion and now 24% of the total; adjusted EBITDA rose 25% to $389 million and free cash flow reached $213 million, or 128% of adjusted net income. On that strength management raised the full-year adjusted EPS outlook to $15 to $17 and guided sales to roughly $24.9 to $25.6 billion, with data center sales projected to grow more than 20% for the year. The market reaction was sharp, with the stock rising double digits on the print.
The forward catalyst is conversion. Backlog rose 22% to a record, so the question for the next several quarters is whether that backlog ships at the margins the guidance assumes, and whether the data center demand that now drives a quarter of sales sustains its pace as hyperscaler capital budgets are set. Within the segments, management pointed to strong growth in communications and security white space and in the electrical gray space served by the EES segment, so the breadth of the data center build, not just the headline number, is what to watch in subsequent reports.
Peer Cohorts (Per Segment, With Filing Citations)
Electrical & Electronic Solutions (EES) (reported)
- GWW (W.W. GRAINGER, INC.)
- (no filing in the citation store)
- AIT (APPLIED INDUSTRIAL TECHNOLOGIES, INC.)
- (no filing in the citation store)
- MSM (MSC INDUSTRIAL DIRECT CO., INC.)
- (no filing in the citation store)
- DXPE (DXP Enterprises, Inc.)
- (no filing in the citation store)
- FAST (FASTENAL CO)
- (no filing in the citation store)
Communications & Security Solutions (CSS) (reported)
- VSH (VISHAY INTERTECHNOLOGY INC)
- (no filing in the citation store)
- APH (AMPHENOL CORP /DE/)
- (no filing in the citation store)
- TEL (TE CONNECTIVITY PLC)
- (no filing in the citation store)
- LFUS (LITTELFUSE INC /DE)
- (no filing in the citation store)
- CTS (CTS CORPORATION)
- (no filing in the citation store)
Utility & Broadband Solutions (UBS) (reported)
- FERG (Ferguson Enterprises Inc.)
- (no filing in the citation store)
- CNM (Core & Main, Inc.)
- (no filing in the citation store)
- DNOW (DNOW INC.)
- (no filing in the citation store)
- DXPE (DXP Enterprises, Inc.)
- (no filing in the citation store)
- AIT (APPLIED INDUSTRIAL TECHNOLOGIES, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings release, May 2026 · FY2025 10-K, accession 0000929008-26-000008 · Q1 2026 earnings call, May 2026