Once again I am returning to specialty distributors (for me a fascinating ecosystem). This time the report is about Wesco International (WCC), one of the largest North American industrial distributors, offering electrical, industrial, and communications products and services.
However this time it is a little bit different. I usually find that these specialty distributors always seems expensive, trading at multiples well above the ones that could be considered as “reasonable” for an average company, even though it is commonly for a good reason, which is the quality and trajectory of those companies. In the case of Wesco, the Company is not trading with a premium over the market and indeed it is the opposite. Let’s have a look to the following charts (ordered from left to right by operating margin):
As it can be observed, Wesco is trading with a discount with regard to its peers and this is probably because the market considers its business to be of lower quality. I do think that this is …
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