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Msc Industrial Direct Company (MSM)
NYSE:MSM
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MSC Industrial
(NYSE:MSM)
Rating:74Outperform
Price Target:
$98.00
â–²(12.57%Upside)
Positive Factors
Customer Growth
MSM sounded positive on its initial read into its web enhancements, noting more accelerating new customer growth.
Earnings
Fourth-quarter gross margin guidance of 40.9% is better than normal sequentials on price/cost and productivity actions.
Sales Strategy
Sales realignment is helping spur public sector growth and could be a tailwind for core customers and national accounts.
Negative Factors
End-Markets
Metalworking and heavy manufacturing end-markets remain soft despite some lift in industrial production.
Market Environment
It is tough to get overly excited about MSM shares in the current environment.
Tariffs
Falloff in construction and ag equipment production due to tariffs is a key watch item.
MSC Industrial (MSM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.85B
Dividend Yield3.91%
Average Volume (3M)724.11K
Price to Earnings (P/E)24.7
Beta (1Y)0.89
Revenue Growth-4.11%
EPS Growth-31.26%
CountryUS
Employees7,191
SectorIndustrials
Sector Strength94
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)1.08
Shares Outstanding55,675,777
10 Day Avg. Volume690,750
30 Day Avg. Volume724,110
Financial Highlights & Ratios
PEG Ratio-3.65
Price to Book (P/B)3.63
Price to Sales (P/S)0.00
P/FCF Ratio18.81
Enterprise Value/Market Cap1.12
Enterprise Value/Revenue0.36
Enterprise Value/Gross Profit3.55
Enterprise Value/Ebitda3.19
Forecast
1Y Price Target
$89.50Price Target Upside2.80% Upside
Rating ConsensusHold
Number of Analyst Covering7
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 Earnings Call Summary
Earnings Call Date:Jul 01, 2025
(Q3-2025)
| % Change Since: 3.37%|
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While there were positive developments such as sequential sales improvement, gross margin performance, and growth in specific programs like In-Plant and Vending, these were counterbalanced by year-over-year sales declines, challenges in core and national accounts, and a decline in operating margin. The macroeconomic environment and tariff-related uncertainties also posed challenges.Q3-2025 Updates
Positive Updates
Sequential Sales Improvement
Average daily sales improved 7% quarter-over-quarter, exceeding historical 2Q to 3Q sequential averages.
Gross Margin Performance
Gross margins came in at the higher end of expectations, with a reported gross margin of 41%, improving 10 basis points year-over-year.
In-Plant and Vending Program Growth
In-Plant program count increased by 23% year-over-year, and the installed base of vending machines rose by 9%.
Public Sector Growth
Public sector sales continued to grow, improving 2.4% year-over-year.
Web Traffic and Conversion Rates
Direct traffic to mscdirect.com grew low double digits year-over-year and mid-single digits quarter-over-quarter, with improvements in site conversion rate metrics.
Negative Updates
Year-over-Year Sales Decline
Average daily sales for the fiscal third quarter declined 0.8% year-over-year.
Core and National Accounts Performance
Core customers' sales declined 0.8% year-over-year, while national accounts declined 1.7%.
Operating Margin Decline
Adjusted operating margin declined 240 basis points compared to the prior year.
Macro Environment Challenges
Subdued conditions in manufacturing end markets with softness in automotive and fabricated metals, and a negative shift in the MBI sentiment readings.
Tariff-Driven Uncertainty
Customer caution and temporary pauses in activity due to tariffs and general uncertainty.
Company Guidance
During the fiscal third quarter 2025 conference call, MSC Industrial Supply reported a 0.8% year-over-year decline in average daily sales (ADS), slightly above their outlook's midpoint, yet a 7% quarter-over-quarter improvement, surpassing historical 2Q to 3Q averages. Gross margins reached the upper end of expectations, with reported and adjusted operating margins at 8.5% and 9.0% respectively. Adjusted operating margins rose 190 basis points sequentially to meet the midpoint of their outlook. The company continued enhancing its core customer focus, reflected in a 0.8% year-over-year decline in core customer daily sales, aligning with overall company results. Web enhancements fueled low double-digit year-over-year and mid-single-digit quarter-over-quarter growth in direct traffic to mscdirect.com, along with improved site conversion rates. In high-touch solutions, In-Plant program counts rose by 23% and vending machines by 9% year-over-year. Meanwhile, OEM product line sales grew slightly. Looking forward, MSC expects fiscal fourth quarter ADS to range from a 0.5% decline to a 1.5% increase year-over-year, with gross margins anticipated to perform better than the historical seasonal decline of 40 basis points, stabilizing at 40.9% plus or minus 20 basis points.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
87.06
Price Trends
83.43
Positive
79.65
Positive
79.45
Positive
Market Momentum
1.18
Positive
53.39
Neutral
26.71
Neutral
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 87.06 is below the 20-day moving average (MA) of 87.95, above the 50-day MA of 83.43, and above the 200-day MA of 79.45, indicating a neutral trend. The MACD of 1.18 indicates Positive momentum. The RSI at 53.39 is Neutral, neither overbought nor oversold. The STOCH value of 26.71 is Neutral, 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 (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $55.01B | 45.84 | 32.57% | 2.99% | 4.84% | 2.98% | |
75 Outperform | $1.07B | 17.51 | 22.15% | 3.67% | -0.79% | -13.64% | |
74 Outperform | $4.85B | 24.71 | 14.34% | 3.91% | -4.11% | -31.26% | |
73 Outperform | $10.33B | 16.08 | 14.38% | 0.82% | -1.80% | 9.55% | |
73 Outperform | $10.21B | 26.78 | 22.23% | 0.62% | 0.50% | 4.48% | |
73 Outperform | $50.19B | 26.68 | 57.19% | 0.80% | 3.71% | 7.23% | |
65 Neutral | $11.06B | 15.73 | 5.16% | 1.93% | 3.12% | -25.59% |
* Industrials Sector Average
Performance Comparison
MSM
MSC Industrial
87.06
3.00
3.57%
AIT
Applied Industrial Technologies
268.07
54.56
25.55%
FAST
Fastenal Company
47.93
13.31
38.45%
GIC
Global Industrial Company
27.35
-7.20
-20.84%
GWW
WW Grainger
1,052.21
89.59
9.31%
WCC
Wesco International
211.75
42.99
25.47%
MSC Industrial Corporate Events
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.
The most recent analyst rating on (MSM) stock is a Hold with a $85.00 price target. To see the full list of analyst forecasts on MSC Industrial stock, see the MSM Stock Forecast page.
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.
The most recent analyst rating on (MSM) stock is a Hold with a $85.00 price target. To see the full list of analyst forecasts on MSC Industrial stock, see the MSM Stock Forecast page.
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.