Wesco Aircraft Holdings Shares Are Flying High – Stock Up 25%

Wesco

The constant decline in Wesco Aircraft Holdings (NYSE:WAIR) revenue and earnings had significantly impacted its share price in the past three years. The stock dipped from $22 a share in 2014 to only $6 at the beginning of this year.

Wesco Aircraft shares experienced some relief following the announcement of the improved outlook for FY2018.  WAIR stock rose more than 29% in todays trade. The stock price is still down 48% in the last twelve months.

Wesco

Source Image: finviz.com

First Quarter Results For Wesco Aircraft Holdings

Its Q1 revenue of $363 million increased 7% from the previous year period. The growth was particularly driven by sales from new businesses and higher volumes of hardware and chemical contracts. The better ad-hoc sales performance contributed to sales growth in Q1.

Todd Renehan, chief executive officer, said, “Results in the fiscal 2018 first quarter reflect improved sales and operating performance, consistent with the recovery in leading indicators that began in the fourth quarter of fiscal 2017.”

Although its gross margin increased in the first quarter, the growth is mainly due to higher revenues. In fact, its gross margin as a percentage of sales decreased to 26% in Q1, relative to 26.4% in the previous year quarter.

Higher operational costs have created further damage to operating earnings and earnings per share. Consequently, its adjusted earnings per share of $0.15 declined considerably from$0.19 per diluted share, in the same period last year.

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Improving Outlook Supports the Rally

The company’s strategy of generating revenue from new business lines is working considering the sales guidance for full-year.  Also, the company has been comprehensively reviewing their operational structure and business model to reduce the cost structure.

Todd Renehan stated: “The comprehensive business assessment that we initiated in the first quarter is progressing well. We’re very encouraged with the assessment’s findings, which reinforce our belief that significant opportunities exist to reduce costs and enhance margins.”

Therefore, Investors are currently focusing on the long-term fundamentals of Wesco Aircraft. Its full-year sales are likely to increase for the first time in the last three years. It expects revenue growth in the range of a mid-single digit rate and a low double-digit increase in adjusted EBITDA in 2018.

Featured Image: wescoair.com

Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.
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