WESCO to Acquire Hi-Line Utility - Analyst Blog

WESCO International, Inc. WCC recently announced the acquisition of Hi-Line Utility Supply through its subsidiary, WESCO Distribution, for an undisclosed amount. The deal is expected to be closed in the coming months.

Hi-Line Utility provides utility maintenance, repair, operations and safety products, as well as rubber goods testing and certification services. The company generates annual sales of approximately $30 million from two branches in Elgin and Millbury.

The Hi-Line Utility acquisition will enhance WESCO's utility products and service offerings which will strengthen its portfolio within the utility and industrial end markets. In the last reported quarter, the company's industrial as well as utility business witnessed strong growth due to its integrated supply model offering enhanced efficiency to its customers.

The acquisition, expected to be accretive to WESCO's earnings, will likely add 3 cents per share to its profit in the first year of operation.

WESCO is quite active on the merger and acquisition front. In Mar 2014, WESCO acquired Hazmasters Ltd. — a distributor of safety products — to strengthen its safety business in Canada. Last year, the company acquired RS Electronics and LaPrairie, which expanded its industrial original equipment manufacturer customer base as well as electronic-based product offerings.

The company's acquisition pipeline remains quite robust with opportunities to further expand and strengthen its portfolio.

WESCO is one of the largest suppliers and distributors of electrical construction products in the United States. However, the company's first-quarter adjusted earnings and revenues were down a respective 38.3% and 3.7%, sequentially. Lower sales volumes in Canada and a weaker Canadian currency led to the dismal bottom-line performance.

Currently, WESCO has a Zacks Rank #3 (Hold). Other better-ranked stocks that are performing well at current levels include LivePerson Inc. LPSN, OmniVision Technologies, Inc. OVTI and Sanderson Farms, Inc. SAFM. All these stocks sport a Zacks Rank #1 (Strong Buy).