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Msc Industrial Direct Company (MSM)
NYSE:MSM
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MSC Industrial
(NYSE:MSM)
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Rating:75Outperform
Price Target:
$98.00
â–²(9.87% Upside)
MSC Industrial's overall stock score reflects solid financial health and strong cash flow, which are its most significant strengths. Despite a high valuation, the company's dividend yield and recent positive corporate events support investor sentiment. However, challenges in revenue growth and macroeconomic conditions temper the outlook.
Positive Factors
Cash Flow Strength
Strong cash flow conversion supports operational needs and potential investments, ensuring long-term financial stability and growth.
In-Plant and Vending Growth
Expansion in In-Plant and vending programs indicates strategic growth, enhancing service offerings and customer engagement.
Financial Flexibility
The amendment enhances financial flexibility, allowing the company to better manage its capital structure and invest in growth opportunities.
Negative Factors
Revenue Decline
Declining revenue impacts the company's ability to grow and invest in new opportunities, potentially affecting long-term competitiveness.
Operating Margin Decline
Decreased operating margins indicate rising costs or inefficiencies, which could strain profitability and limit reinvestment capacity.
Macroeconomic Challenges
Ongoing macroeconomic challenges in key markets may hinder demand for MSC's products, affecting revenue and growth prospects.
MSC Industrial (MSM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.95B
Dividend Yield3.82%
Average Volume (3M)466.12K
Price to Earnings (P/E)25.1
Beta (1Y)0.90
Revenue Growth-4.11%
EPS Growth-31.26%
CountryUS
Employees7,191
SectorIndustrials
Sector Strength72
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)1.08
Shares Outstanding55,675,777
10 Day Avg. Volume507,026
30 Day Avg. Volume466,119
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue1.35
Enterprise Value/Gross Profit3.29
Enterprise Value/Ebitda13.34
Forecast
1Y Price Target
$92.50Price Target Upside3.70% Upside
Rating ConsensusHold
Number of Analyst Covering7
MSC Industrial Business Overview & Revenue Model
Company DescriptionMSC Industrial Direct Co., Inc., together with its subsidiaries, distributes metalworking and maintenance, repair, and operations (MRO) products and services in the United States, Canada, Mexico, and the United Kingdom. Its MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock products, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components, and electrical supplies. The company offers approximately 1.9 million stock-keeping units through its catalogs and brochures; e-commerce channels, including its Website, mscdirect.com; inventory management solutions; and call-centers and branches. It operates through a distribution network of 28 branch offices, 11 customer fulfilment centers, and seven regional inventory centers. The company serves individual machine shops, Fortune 1000 manufacturing companies, and government agencies, as well as manufacturers of various sizes. MSC Industrial Direct Co., Inc. was founded in 1941 and is headquartered in Melville, New York.
How the Company Makes MoneyMSC Industrial generates revenue primarily through the sale of industrial supplies and tools. The company's revenue model is built on a combination of direct sales, e-commerce transactions, and a robust catalog system that allows customers to order products easily. Key revenue streams include sales from metalworking tools, MRO products, and safety equipment, with significant contributions from both small and large business customers. MSC also benefits from long-term relationships with suppliers and manufacturers, which enable it to offer a wide range of products at competitive prices. In addition, the company invests in technology and logistics to improve customer service and streamline operations, further enhancing its ability to generate consistent revenue.
MSC Industrial Earnings Call Summary
Earnings Call Date:Jul 01, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted several positive developments, such as improvements in gross margin, expansion of In-Plant and vending programs, and strong free cash flow conversion. However, these were offset by declines in average daily sales, operating margins, and macroeconomic challenges affecting the manufacturing sector. Although there is progress in strategic initiatives and leadership expansion, the financial and market challenges present a mixed outlook.Q3-2025 Updates
Positive Updates
Gross Margin Improvement
Gross margins improved by 10 basis points year-over-year to 41%, benefiting from price adjustments and a positive mix.
In-Plant and Vending Growth
The company expanded its In-Plant program count by 23% and increased its vending machines by 9% year-over-year. Sales through vending were up roughly 8%, and sales to In-Plant program customers grew 10% year-over-year.
Free Cash Flow Conversion
The company reported a free cash flow conversion of approximately 134% for the fiscal third quarter and 129% fiscal year-to-date.
Leadership Expansion
John Reichelt was added as the Senior Vice President and Chief Information Officer, bringing experience from TriMark USA, Aramark, and Procter & Gamble.
Negative Updates
Average Daily Sales Decline
Average daily sales for the fiscal third quarter declined 0.8% year-over-year, though it was slightly above the midpoint of the company's outlook.
Operating Margin Decline
Reported operating margin was 8.5%, down from 10.9% in the prior year. Adjusted operating margin declined 240 basis points year-over-year.
Macroeconomic Challenges
The manufacturing end markets remain subdued, with automotive and fabricated metals continuing to contract. The MBI readings turned negative in April and May, reflecting customer caution around tariffs.
Higher Operating Expenses
Operating expenses increased by $22 million year-over-year, driven by higher personnel-related costs, resulting in a 250 basis point step-up in adjusted operating expense as a percentage of sales.
Company Guidance
During the MSC Industrial Supply Fiscal 2025 Third Quarter Conference Call, the company provided detailed guidance on several key financial metrics. Average daily sales (ADS) for the third quarter declined by 0.8% year-over-year but improved 7% quarter-over-quarter, surpassing historical sequential averages. Gross margins were at the higher end of expectations, resulting in reported and adjusted operating margins of 8.5% and 9.0%, respectively, with the adjusted margin increasing by 190 basis points sequentially. The company also discussed its strategic initiatives, including a 23% increase in the In-Plant program count and a 9% growth in the installed base of vending machines. Moving to the fiscal fourth quarter, MSC anticipates ADS to range between a 0.5% decline and a 1.5% increase year-over-year, while maintaining flat performance compared to the third quarter at the midpoint. The company expects gross margins to perform better than the historical seasonal decline and has projected full-year capital expenditures at the lower end of the $100 million to $110 million range, with free cash flow conversion expected to reach approximately 120%, up from the previous forecast of around 100%.MSC Industrial Financial Statement Overview
Summary
MSC Industrial shows strong financial health with efficient cost management and stable leverage. Although revenue growth and net profit margins have declined, strong cash flow supports future growth.Income Statement
MSC Industrial's income statement shows a solid gross profit margin of 40.92% TTM, indicating efficient cost management. However, the net profit margin has decreased to 5.30% TTM from 6.76% in the previous year, suggesting reduced profitability. Revenue has declined by 7.95% from the previous period, but the EBIT margin remains healthy at 8.23%. The company has room to improve its net profit margins and revenue growth to further enhance its financial position.78
Positive
Balance Sheet
The balance sheet reflects a stable equity ratio of 55.22% TTM, showcasing financial stability. The debt-to-equity ratio is moderate at 0.42, indicating manageable leverage levels. Return on equity has decreased slightly to 14.52% TTM, which is still a solid performance. While the balance sheet is robust, opportunities exist to reduce debt further and improve equity returns.74
Positive
Cash Flow
The cash flow statement demonstrates strong operating cash flow of $360.72 million TTM, translating to a high operating cash flow to net income ratio of 1.82. Despite a decrease in free cash flow growth, the company maintains a healthy free cash flow to net income ratio of 1.33. MSC Industrial's cash flow generation is strong, supporting its operational needs and potential investments.81
Very Positive
| Breakdown | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.82B | 4.01B | 3.69B | 3.24B | 3.19B |
| Gross Profit | 1.57B | 1.64B | 1.56B | 1.33B | 1.34B |
| EBITDA | 451.03M | 553.43M | 555.87M | 389.60M | 442.31M |
| Net Income | 258.59M | 343.23M | 339.79M | 216.91M | 251.12M |
Balance Sheet | |||||
| Total Assets | 2.46B | 2.54B | 2.73B | 2.46B | 2.38B |
| Cash, Cash Equivalents and Short-Term Investments | 29.59M | 50.05M | 43.54M | 40.54M | 125.21M |
| Total Debt | 568.17M | 521.42M | 860.77M | 836.40M | 675.46M |
| Total Liabilities | 1.06B | 1.05B | 1.37B | 1.30B | 1.06B |
| Stockholders Equity | 1.39B | 1.48B | 1.35B | 1.15B | 1.31B |
Cash Flow | |||||
| Free Cash Flow | 311.29M | 607.09M | 184.81M | 170.72M | 349.75M |
| Operating Cash Flow | 410.70M | 699.58M | 246.18M | 224.46M | 396.74M |
| Investing Cash Flow | -123.40M | -112.67M | -94.49M | -75.75M | -49.28M |
| Financing Cash Flow | -307.35M | -580.40M | -148.14M | -233.75M | -254.62M |
MSC Industrial Technical Analysis
Positive
89.20
Price Trends
88.94
Positive
85.50
Positive
81.39
Positive
Market Momentum
0.31
Positive
44.95
Neutral
13.13
Positive
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 89.2 is below the 20-day moving average (MA) of 91.21, above the 50-day MA of 88.94, and above the 200-day MA of 81.39, indicating a neutral trend. The MACD of 0.31 indicates Positive momentum. The RSI at 44.95 is Neutral, neither overbought nor oversold. The STOCH value of 13.13 is Positive, 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 (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | 54.56B | 45.95 | 39.08% | 1.78% | 4.84% | 2.98% | |
79 Outperform | 1.41B | 21.46 | 21.69% | 2.82% | -1.58% | -5.62% | |
78 Outperform | 10.11B | 16.26 | 13.91% | 0.85% | 1.30% | -1.09% | |
75 Outperform | $4.95B | 25.08 | 14.34% | 3.82% | -4.11% | -31.26% | |
73 Outperform | 9.79B | 25.62 | 21.31% | 0.68% | 1.88% | 2.91% | |
70 Outperform | 45.58B | 24.05 | 52.31% | 0.91% | 4.35% | 7.84% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
Performance Comparison
MSM
MSC Industrial
89.20
6.45
7.79%
AIT
Applied Industrial Technologies
259.10
38.69
17.55%
DXPE
DXP Enterprises
119.96
68.01
130.91%
FAST
Fastenal Company
47.85
12.77
36.40%
GIC
Global Industrial Company
36.55
4.07
12.53%
GWW
WW Grainger
951.71
-83.62
-8.08%
MSC Industrial Corporate Events
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
MSC Industrial CFO Resignation and Interim Appointment
Neutral
Jul 28, 2025
On July 28, 2025, MSC Industrial Supply Co. announced the resignation of Kristen Actis-Grande as Chief Financial Officer, effective August 8, 2025, and the interim appointment of Greg Clark, the current Vice President of Finance and Corporate Controller. The company is optimistic about its fiscal fourth-quarter performance, with average daily sales in June exceeding expectations and July maintaining positive growth, indicating a trend towards the upper half of its guidance range.
Private Placements and FinancingBusiness Operations and Strategy
MSC Industrial Amends Credit Agreement for Flexibility
Positive
Jul 22, 2025
On July 16, 2025, MSC Industrial Direct Co., Inc. announced an amendment to its existing Credit Agreement, extending the maturity date of its $600 million unsecured revolving loan facility to July 16, 2030, and introducing various updates including a $50 million swingline loan sub-facility. This amendment aims to enhance the company’s financial flexibility and operational stability, potentially impacting its market positioning and stakeholder relations positively.
Dividends
MSC Industrial Declares Cash Dividend for Shareholders
Positive
Jun 25, 2025
On June 25, 2025, MSC Industrial Supply Co. announced that its Board of Directors declared a cash dividend of $0.85 per share, payable on July 23, 2025, to shareholders recorded by July 9, 2025. This dividend declaration reflects the company’s ongoing commitment to returning value to its shareholders and may positively impact investor sentiment and the company’s market positioning.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.