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Wesco Aircraft Announces Preliminary Second Quarter Results, Shares Tumble to 6-Year Low

Jason BondJason Bond ·

Wesco Aircraft Holdings Inc (NYSE: WAIR) shares plummet over 18%, after the company announced its preliminary second quarter 2017 financial results. Additionally, the company announced that it had some management changes. Now, its second quarter 2017 financial results were in focus. The company announced revenue and adjusted earnings figures well below the consensus estimate.

Take a look at Wesco Aircraft Holdings on the hourly chart:

 

 

Source: Investing.com

Preliminary Second Quarter 2017 Financial Results

Typically, when a company announces preliminary financial results, it’s an indication at how the company should perform and gives investors a heads up, so they don’t get too surprised by their financial performance. For the second quarter of the 2017 fiscal year, Wesco Aircraft announced that it expects to report net sales of $364.6M, net income of $17.4M, or 18 cents per diluted share. Now, the company expects to report adjusted net income of $21.1M, or 21 cents per diluted share and an adjusted earnings before interest, taxes depreciation and amortization (EBITDA) of $39.0M.

CEO Departure

The company also announced the departure of its CEO, which may have also attributed to the selloff. David Castagnola, former President and CEO, and a member of the company’s Board of Directors announced his retirement. That in mind, Wesco Aircraft appointed Todd Renehan as its news Chief Executive Officer and Alex Murray as its President and Chief Operating Officer. Moreover, Renehan was appointed to the Board of Directors as a Class I director. These management changes were effective on April 26, 2017.

Prior to his newly appointed position, Renehan served as the President of Haas Group International, which was acquired by Wesco Aircraft in 2014. Thereafter, Renehan served as Wesco’s Executive Vice President and Chief Commercial Officer.

Renehan stated, “I am honored to take the helm at Wesco Aircraft…I am confident we will continue to make progress toward realizing our growth and profitability goals while building on our solid platform to offer an even more compelling value proposition with superior customer service. I believe in the company’s future and our ability to deliver for customers, create opportunities for employees, and enhance value for shareholders for years to come.”

WAIR Valuation

After today’s performance, Wesco Aircraft had a price-to-earnings ratio of 11.68, a price-to-sales ratio of 0.70 and price-to-book ratio of 1.10, according to finviz. The company’s valuation ratios are well below the industry average, and this selloff may have uncovered a value play, but keep in mind this would be considered a contrarian, or mean reversion trade.

Final Thoughts

When a company announces preliminary financial results, it should move the stock significantly. Additionally, if a company previously had a CEO with strong leadership qualities, and they announce their departure, it could move the stock, the same is true with a CEO who investors did not like. Typically, when an officer announces their departure, it should move the stock, and this was the case with WAIR today.

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