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Msc Industrial Direct Company (MSM)
NYSE:MSM
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MSC Industrial
(NYSE:MSM)
69Neutral
Positive Factors
Customer Growth
MSM sounded positive on its initial read into its web enhancements, noting more accelerating new customer growth.
Market Position
MSM is the largest player in its metalworking niche of industrial distribution.
Negative Factors
Earnings Revisions
Recent challenges with execution and machinery end market softness have led to a series of negative EPS revisions.
Market Challenges
The nearer-term trends appear challenged, with PMI continuing to languish well below 50.
MSC Industrial (MSM) vs. S&P 500 (SPY)
Market Cap
$4.54B
Dividend Yield4.15%
Average Volume (3M)562.13K
Price to Earnings (P/E)21.4
Beta (1Y)0.85
Revenue Growth-5.71%
EPS Growth-31.93%
CountryUS
Employees7,191
SectorIndustrials
Sector Strength91
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)0.72
Shares Outstanding55,721,676
10 Day Avg. Volume364,739
30 Day Avg. Volume562,127
Financial Highlights & Ratios
PEG Ratio-2.09
Price to Book (P/B)3.13
Price to Sales (P/S)0.00
P/FCF Ratio14.08
Enterprise Value/Market Cap1.06
Enterprise Value/Revenue0.31
Enterprise Value/Gross Profit3.12
Enterprise Value/Ebitda2.61
Forecast
1Y Price Target
$79.00Price Target Upside-3.55% Downside
Rating ConsensusHold
Number of Analyst Covering5
MSC Industrial Business Overview & Revenue Model
Company DescriptionMSC Industrial Direct Co., Inc. (MSM) is a leading North American distributor of metalworking and maintenance, repair, and operations (MRO) products and services. The company serves a wide range of industries, including manufacturing, government, and commercial sectors, by providing a broad selection of products such as cutting tools, abrasives, fasteners, and safety products. MSC Industrial offers its customers access to over a million products via its e-commerce platform, catalogs, and a comprehensive sales force, supporting businesses in optimizing their operations, reducing costs, and improving productivity.
How the Company Makes MoneyMSC Industrial makes money primarily through the sale of industrial products and solutions. Its revenue model is based on the distribution of a vast array of metalworking and MRO products to businesses across various sectors. The company generates income through direct sales from its e-commerce platform, customer service centers, and a network of sales professionals. MSC Industrial also offers value-added services like inventory management solutions and technical support, enhancing customer loyalty and securing long-term contracts. Significant partnerships with leading manufacturers and suppliers allow MSC to provide a diverse and high-quality product range, contributing to its competitive advantage and earnings growth.
MSC Industrial Financial Statement Overview
Summary
MSC Industrial maintains a strong financial position with healthy profitability and cash flow metrics. Despite a recent decline in revenue and net income, the company continues to demonstrate efficient cost management and solid cash generation. The balance sheet reflects moderate leverage and strong equity financing. Continued focus on revenue growth and operational efficiency will be key to sustaining financial health.Income Statement
MSC Industrial shows strong gross profit margins, indicating effective cost management. However, there is a decline in revenue and net income on a TTM basis, reflecting potential challenges in maintaining growth. Net profit margin and EBITDA margin remain healthy, but the dip in EBIT margin suggests rising operational costs.75
Positive
Balance Sheet
The company's debt-to-equity ratio is moderate, indicating a balanced leverage position. The equity ratio is strong, reflecting a solid foundation of equity financing. However, there is a slight decrease in stockholders' equity, signaling potential concerns over reinvestment or return to shareholders.70
Positive
Cash Flow
The company maintains robust free cash flow, demonstrating strong cash generation capabilities. The operating cash flow to net income ratio is favorable, indicating efficient conversion of income to cash. The free cash flow growth rate is slightly negative on a TTM basis, but overall cash flow management remains strong.85
Very Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.75B | 3.82B | 4.01B | 3.69B | 3.24B | 3.19B | Gross Profit |
| 1.53B | 1.57B | 1.64B | 1.56B | 1.33B | 1.34B | EBIT |
| 336.84M | 390.39M | 483.73M | 468.71M | 301.77M | 350.74M | EBITDA |
| 404.70M | 451.03M | 553.43M | 555.87M | 389.60M | 442.31M | Net Income Common Stockholders |
| 213.33M | 258.59M | 343.23M | 339.79M | 216.91M | 251.12M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 41.28M | 29.59M | 50.05M | 43.54M | 40.54M | 125.21M | Total Assets |
| 2.46B | 2.46B | 2.54B | 2.73B | 2.46B | 2.38B | Total Debt |
| 589.65M | 568.17M | 521.42M | 860.77M | 836.40M | 675.46M | Net Debt |
| 548.37M | 538.59M | 471.37M | 817.23M | 795.87M | 550.25M | Total Liabilities |
| 1.10B | 1.06B | 1.05B | 1.37B | 1.30B | 1.06B | Stockholders Equity |
| 1.36B | 1.39B | 1.48B | 1.35B | 1.15B | 1.31B |
| Cash Flow | Free Cash Flow | ||||
| 301.54M | 311.29M | 607.09M | 184.81M | 170.72M | 349.75M | Operating Cash Flow |
| 407.12M | 410.70M | 699.58M | 246.18M | 224.46M | 396.74M | Investing Cash Flow |
| -120.49M | -123.40M | -112.67M | -94.49M | -75.75M | -49.28M | Financing Cash Flow |
| -266.17M | -307.35M | -580.40M | -148.14M | -233.75M | -254.62M |
MSC Industrial Technical Analysis
Positive
81.91
Price Trends
76.79
Positive
77.76
Positive
78.98
Positive
Market Momentum
0.84
Negative
65.32
Neutral
94.14
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MSM, the sentiment is Positive. The current price of 81.91 is above the 20-day moving average (MA) of 77.30, above the 50-day MA of 76.79, and above the 200-day MA of 78.98, indicating a bullish trend. The MACD of 0.84 indicates Negative momentum. The RSI at 65.32 is Neutral, neither overbought nor oversold. The STOCH value of 94.14 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MSM.
MSC Industrial Risk Analysis
MSC Industrial disclosed 32 risk factors in its most recent earnings report. MSC Industrial reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
MSC Industrial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $47.63B | 41.42 | 32.35% | 1.99% | 3.08% | -0.76% | |
77 Outperform | $52.92B | 28.13 | 57.19% | 0.74% | 3.71% | 7.23% | |
75 Outperform | $8.99B | 23.69 | 22.23% | 0.66% | 0.50% | 4.48% | |
74 Outperform | $1.05B | 17.22 | 22.15% | 3.69% | -0.79% | -13.64% | |
71 Outperform | $8.35B | 13.11 | 14.38% | 0.97% | -1.80% | 9.55% | |
69 Neutral | $4.54B | 21.45 | 15.53% | 4.15% | -5.71% | -31.93% | |
64 Neutral | $4.44B | 11.99 | 5.16% | 249.23% | 4.01% | -11.87% |
* Industrials Sector Average
Performance Comparison
MSM
MSC Industrial
81.91
-6.73
-7.59%
AIT
Applied Industrial Technologies
233.29
33.70
16.88%
FAST
Fastenal Company
83.16
17.95
27.53%
GIC
Global Industrial Company
27.37
-5.99
-17.96%
GWW
WW Grainger
1,100.41
154.59
16.34%
WCC
Wesco International
171.19
-14.93
-8.02%
MSC Industrial Earnings Call Summary
Earnings Call Date:Apr 03, 2025
(Q2-2025)
| % Change Since: 4.58%|
Next Earnings Date:Jul 09, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment. While there are significant steps taken towards improving digital capabilities and expanding the solutions footprint, the company is facing notable challenges with declining sales and margins, especially in key sectors like automotive. The positive developments in execution are countered by a soft demand environment.Q2-2025 Updates
Positive Updates
Website Upgrades and Marketing Initiatives
Completed significant upgrades to the website to improve search and purchasing experiences. Early indicators show increases in new customer acquisition, website traffic, and daily revenues.
Expansion of Solutions Footprint
Increased the in-plant program count by 24% year-over-year to 387 programs and installed vending machines by 9% to over 28,000 machines.
Growth in Public Sector
Achieved 13.2% year-over-year growth in the public sector customer type.
Network Optimization Initiatives on Track
Progressing towards $10 million to $15 million in annualized savings by fiscal year 2026 through network optimization initiatives.
Negative Updates
Decline in Average Daily Sales
Average daily sales declined 4.7% year-over-year, with a 5.5% sequential decline.
Gross Margin Decline
Gross margin of 41% declined 50 basis points year-over-year due to higher priced inventories, customer mix, and acquisition headwinds.
Challenges in Automotive and Heavy Truck Sectors
Automotive and heavy truck sectors remain soft, impacting overall performance.
Operating Margin and Earnings Decrease
Adjusted operating margin decreased 340 basis points year-over-year, and adjusted earnings per share declined from $1.18 to $0.72.
Company Guidance
During MSC Industrial Supply's fiscal 2025 second-quarter conference call, the company reported a 4.7% year-over-year decline in average daily sales, with gross and adjusted operating margins meeting the high end of expectations. Notably, MSC improved its in-plant program count by 24% to 387 and increased its installed vending machines by 9% to over 28,000, despite ongoing soft demand. The company completed website upgrades to enhance customer experience, resulting in a 50% reduction in clicks for checkout and an increase in new customer acquisition and website traffic. Additionally, MSC achieved 13.2% growth in the public sector, while national accounts and core customers showed improvement as the quarter progressed. The company maintained a healthy balance sheet with net debt of approximately $498 million and a free cash flow conversion of 63% for the quarter. Looking forward, MSC anticipates average daily sales in the third quarter to range from a 2% decline to flat year-over-year, with adjusted operating margins expected between 8.7% and 9.3%.MSC Industrial Corporate Events
Executive/Board Changes
MSC Industrial’s Chief People Officer Resigns
Negative
Apr 21, 2025
On April 15, 2025, Elizabeth Bledsoe announced her voluntary resignation as Senior Vice President & Chief People Officer of MSC Industrial. Her departure is scheduled for on or around May 7, 2025, which may impact the company’s leadership dynamics.
Spark’s Take on MSM Stock
According to Spark, TipRanks’ AI Analyst, MSM is a Outperform.
MSC Industrial Supply Co. exhibits a strong financial foundation with efficient cash flow management and profitability, despite recent declines in sales and margins. Technical signals are neutral, and the valuation is reasonable with a healthy dividend yield. The earnings call highlights improvement efforts, yet challenges in key sectors remain. The dividend announcement supports positive shareholder sentiment.
To see Spark’s full report on MSM stock, click here.
DividendsBusiness Operations and Strategy
MSC Industrial Declares Cash Dividend for Shareholders
Positive
Mar 26, 2025
On March 26, 2025, MSC Industrial Supply Co. announced that its Board of Directors declared a cash dividend of $0.85 per share, payable on April 23, 2025, to shareholders of record as of April 9, 2025. This decision reflects the company’s ongoing commitment to returning value to shareholders and may have implications for its financial strategy and stakeholder relations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.