The most you can lose on any stock (assuming you don’t use leverage) is 100% of your money. But if you pick the right stock, you can make a lot more than 100%. For example, the WESCO International, Inc. (NYSE:WCC) share price has soared 177% return in just a single year. On top of that, the share price is up 23% in about a quarter. And shareholders have also done well over the long term, with an increase of 78% in the last three years.
See our latest analysis for WESCO International
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Over the last twelve months, WESCO International actually shrank its EPS by 67%.
This means it’s unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn’t seem to correlate with the change in share price, it’s worth taking a look at other metrics.
However the year on year revenue growth of 72% would help. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on WESCO International
A Different Perspective
It’s nice to see that WESCO International shareholders have received a total shareholder return of 177% over the last year. That gain is better than the annual TSR over five years, which is 14%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that WESCO International is showing 4 warning signs in our investment analysis , and 1 of those is significant…
WESCO International is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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