Education
About Us
Working with TipRanks
Follow Us
Msc Industrial Direct Company (MSM)
NYSE:MSM
Top Page
MSC Industrial
(NYSE:MSM)
Select Model
Select Model
Rating:62Neutral
Price Target:
$86.00
▲(2.48% Upside)
MSM scores as a mid-range setup: financial performance is constrained by stalled growth, margin compression, and weaker recent cash flow, partially offset by a solid balance sheet. The earnings call adds support via improving operational execution and constructive guidance, while technical indicators are notably bearish and valuation is only moderate despite a strong dividend yield.
Positive Factors
Manageable leverage and resilient balance sheet
Sustained low leverage and sizable equity give MSC financial flexibility to fund working capital, invest in growth initiatives, and sustain dividends/repurchases. A stronger balance sheet supports resilience through industrial cycles and buffers operational shocks over months.
Growing recurring solutions (vending and implants)
Expansion of vending and implant programs increases recurring, higher-retention revenue and deepens customer integration. These value-added services reduce cyclical exposure, raise switching costs, and structurally improve lifetime customer value and margin visibility over the medium term.
Pricing power and gross margin stability
Ability to pass supplier cost increases through to customers while holding gross margin steady shows durable pricing leverage. This supports earnings resilience during inflationary periods and enables management to protect margins while pursuing modest volume growth.
Negative Factors
Stalled revenue growth and margin compression
Persistent flat or declining top line combined with multi-year margin erosion indicates weakening operating leverage. Without durable revenue expansion, maintaining returns and funding investments becomes harder, pressuring profitability and strategic optionality over the next several quarters.
Weaker operating and free cash flow
Deteriorating cash generation reduces internal funding for CapEx, working capital and shareholder returns. Lower FCF relative to prior peak limits strategic flexibility and increases reliance on debt or securitization to bridge timing gaps in cash conversion across economic cycles.
Material input-cost exposure (tungsten/carbine) and volume pressure
Concentrated exposure to volatile metalworking inputs can squeeze margins if pass-through is delayed or demand softens. Combined with volume weakness in some end markets, input inflation can force price actions that dampen volumes and pressure midterm profitability and customer mix.
MSC Industrial (MSM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.52B
Dividend Yield3.96%
Average Volume (3M)544.53K
Price to Earnings (P/E)22.9
Beta (1Y)0.84
Revenue Growth-1.35%
EPS Growth-22.24%
CountryUS
Employees7,191
SectorIndustrials
Sector Strength72
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)0.99
Shares Outstanding55,803,307
10 Day Avg. Volume466,277
30 Day Avg. Volume544,531
Financial Highlights & Ratios
PEG Ratio-1.13
Price to Book (P/B)3.63
Price to Sales (P/S)1.34
P/FCF Ratio20.89
Enterprise Value/Market Cap1.22
Enterprise Value/Revenue1.45
Enterprise Value/Gross Profit3.55
Enterprise Value/Ebitda14.20
Forecast
1Y Price Target
$93.33Price Target Upside11.21% Upside
Rating ConsensusHold
Number of Analyst Covering5
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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 supply products to various sectors. The company's revenue model is built on a combination of direct sales through its catalog and online platform, which provides customers with easy access to a wide range of products. Key revenue streams include sales of metalworking tools, MRO products, and safety equipment. Additionally, MSC offers services like inventory management solutions, which create recurring revenue opportunities. The company has established significant partnerships with leading manufacturers, enabling it to provide high-quality products and maintain competitive pricing, which further contributes to its earnings.
MSC Industrial Earnings Call Summary
Earnings Call Date:Jan 07, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Apr 08, 2026
Earnings Call Sentiment Positive
The call balanced clear operational and financial progress with near-term headwinds. Highlights include 4% ADS growth in Q1 driven primarily by price (420 bps), core customer outperformance (+6%), digital and solutions momentum (web, vending +9%, implants +13%), margin stabilization (gross margin ~40.7%) and improved adjusted EPS (+15%). Management reinforced structural changes (sales/service redesign), capital returns ($62M) and a pathway to ~20% adjusted incremental margins for the year. Lowlights include volume pressure (-30 bps), a material December sequential decline (~20% month-to-month impact around the holidays), public sector weakness tied to the federal shutdown (-5% YoY; ~100 bps headwind), input inflation (notably tungsten exposure ~15% of sales with mid/high-single-digit supplier price moves), and a modest free cash flow start ($7.4M) impacted by working capital. Overall, positive operational momentum and margin discipline appear to outweigh the short-term seasonality, inflationary shocks, and government-related headwinds.Q1-2026 Updates
Positive Updates
Top-line Growth (Average Daily Sales)
Fiscal Q1 average daily sales (ADS) grew 4% year-over-year, coming in at the midpoint of guidance.
Price Realization
Price contributed ~420 basis points to Q1 growth (4.2%); management expects price in Q2 to be a little north of 5% year-over-year with additional mid-Jan supplier price actions already included in the outlook.
Core and National Account Strength
Core customers' ADS grew ~6% year-over-year; national accounts improved ~3% year-over-year. Core customers have outperformed total company sales for two consecutive quarters.
Digital and Marketing Momentum
Web average daily sales increased mid-single digits year-over-year with improved conversion rates and direct traffic; marketing produced high single-digit improvement in daily sales of uncovered core customers.
Solutions Expansion (Vending and Implants)
Installed vending sales were up ~9% year-over-year and represented ~19% of total sales; implant program daily sales were up ~13% and represented ~20% of total net sales.
Profitability and Margins
Gross margin stabilized at 40.7% (flat YoY). Reported operating margin was 7.9%; adjusted operating margin was 8.4% (vs 8.0% prior year). Adjusted EPS was $0.99 vs $0.86 prior year (≈15% increase).
Incremental Margin Traction and Full-Year Target
Q1 adjusted incremental operating margin was ~18%; company reiterates expectation of ~20% adjusted incremental operating margins for the full fiscal year under a mid-single-digit growth scenario.
Balance Sheet and Capital Allocation
Net debt ~ $491M (~1.2x EBITDA). Returned ~$62M to shareholders in Q1 via dividends and share repurchases. Increased AR securitization capacity by $50M (to $350M) expected to lower cost of funds by >$1M annually.
Operational and Strategic Initiatives
Completed sales territory redesign and began applying optimization to the service model; onboarding of new CEO and SVP of Sales; launching a supplier-designed growth forum (≈1,400 customer-facing attendees) as a growth accelerator.
ESG and Culture
Set a new long-term target to reduce scope 1 and 2 GHG emissions by 15% by 2030; recycled >8,000 pounds of carbide; received multiple employer recognitions.
Negative Updates
Volume Contraction and Public Sector Impact
Volumes contracted ~30 basis points in Q1. Public sector ADS declined ~5% year-over-year due to the federal government shutdown, representing roughly a 100 basis point headwind in the quarter.
Seasonal/Calendar Disruption in December
Fiscal December ADS improved ~2.5% year-over-year for the month but experienced a severe sequential month-over-month decline of roughly 20%; sales from Christmas through month-end were down ~20%, pressuring Q1 cadence.
Inflationary Pressure on Inputs (Tungsten/Carbide)
Significant inflation in metalworking inputs—tungsten prices have increased >100%—impacting ~15% of sales. Mid- to high-single-digit supplier price increases for carbide cutting tools are being passed through, with more potential actions expected in 2026.
Moderation in Net Implant Program Growth
While implant signings remain strong, year-over-year net growth in the number of implant programs at quarter end moderated as some programs were converted back to lower-cost service options to optimize cost-to-serve.
Free Cash Flow and Working Capital Drag
Generated ~$7.4M of free cash flow in Q1 (~14% of net income). FCF was depressed year-over-year due to inventory investment and a step-up in receivables and prepaid expenses, despite a target of ~90% FCF conversion for the year.
Demand Mix and Market Indicators
Demand mixed by end market: aerospace remains strong but softness persists in automotive and heavy truck. MSC’s Market Business Indicator (MBI) remained in contractionary territory.
Near-Term Guide Headwinds and Conservatism
Q2 guidance implies sequential ADS decline of ~4–6% (seasonal and conference timing headwinds) and includes a ~50 basis point revenue shift due to the supplier conference; guidance is cautious given limited visibility into the new calendar year.
Company Guidance
Management guided fiscal 2Q average daily sales growth of 3.5%–5.0% YoY (implying a sequential ADS decline of ~4%–6%), with January/February growth a little over 5% YoY at the midpoint; Q2 gross margin targeted at 40.8% ±20 bps and adjusted operating margin of 7.3%–7.9% (midpoint ≈ +50 bps YoY), while management reiterated adjusted incremental operating margins of ~20% for the full fiscal year (adjusted incrementals were ~18% in 1Q). For context, fiscal 1Q sales were about $966M with ADS +4% (price contributed +420 bps, volumes −30 bps, federal shutdown ≈ −100 bps), gross margin 40.7%, reported operating margin 7.9% (adjusted 8.4%), GAAP EPS $0.93 and adjusted EPS $0.99; solutions/vending ADS +9% (19% of sales), implant customers’ ADS +13% (≈20% of sales), core customers +6%, national accounts +3%, public sector −5%, web ADS mid‑single digits. Balance‑sheet and cash guidance included net debt ≈$491M (~1.2x EBITDA), CapEx $100–110M (Q1 CapEx ≈$22M), D&A $95–100M, interest/other ≈$35M, tax rate 24.5%–25.5%, free cash flow conversion ≈90% (Q1 FCF ≈$7.4M), Q1 shareholder returns ≈$62M, and an increased AR securitization capacity to $350M.MSC Industrial Financial Statement Overview
Summary
Financials are mixed: revenue has been flat-to-down recently with clear margin compression (net margin down to ~5.3% in 2025). The balance sheet is a relative strength with manageable leverage (~0.35–0.42x debt/equity), but cash flow has weakened, with operating and free cash flow stepping down versus 2023.Income Statement
Revenue has been essentially flat-to-down over the last few years (annual growth negative in 2024 and 2025, following a strong 2022–2023), and profitability has clearly compressed. Net margin declined from ~9.2% (2022) and ~8.6% (2023) to ~6.8% (2024) and ~5.3% in 2025, with a similar step-down in operating profitability. Gross margin has held relatively steady around ~41%, which is a positive, but weaker operating leverage is pressuring earnings power.Balance Sheet
Leverage looks manageable with debt at ~0.35–0.42x equity in 2023–TTM (Trailing-Twelve-Months), an improvement from higher leverage in 2021–2022. Equity is sizable and stable relative to assets, supporting balance-sheet resilience. Returns on equity remain solid (mid-teens in 2025 vs. low-20s earlier), though the downshift versus 2022–2023 reflects the recent profitability decline rather than balance-sheet deterioration.Cash Flow
Cash generation has become more uneven. Operating cash flow stepped down materially from 2023 to 2024–TTM (Trailing-Twelve-Months), and free cash flow declined sharply, including a significant contraction in TTM free cash flow versus the prior year. While free cash flow still covers a meaningful portion of net income (roughly ~70–85% across periods shown), the reduced cash flow relative to debt in the most recent period signals weaker near-term cash flexibility compared with the 2023 peak.| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.77B | 3.82B | 4.01B | 3.69B | 3.24B |
| Gross Profit | 1.54B | 1.57B | 1.64B | 1.56B | 1.33B |
| EBITDA | 377.82M | 451.03M | 553.43M | 555.87M | 389.60M |
| Net Income | 199.33M | 258.59M | 343.23M | 339.79M | 216.91M |
Balance Sheet | |||||
| Total Assets | 2.46B | 2.46B | 2.54B | 2.73B | 2.46B |
| Cash, Cash Equivalents and Short-Term Investments | 56.23M | 29.59M | 50.05M | 43.54M | 40.54M |
| Total Debt | 538.81M | 568.17M | 521.42M | 860.77M | 836.40M |
| Total Liabilities | 1.07B | 1.06B | 1.05B | 1.37B | 1.30B |
| Stockholders Equity | 1.39B | 1.39B | 1.48B | 1.35B | 1.15B |
Cash Flow | |||||
| Free Cash Flow | 240.88M | 311.29M | 607.09M | 184.81M | 170.72M |
| Operating Cash Flow | 333.72M | 410.70M | 699.58M | 246.18M | 224.46M |
| Investing Cash Flow | -63.29M | -123.40M | -112.67M | -94.49M | -75.65M |
| Financing Cash Flow | -243.57M | -307.35M | -580.40M | -148.14M | -233.85M |
MSC Industrial Technical Analysis
Negative
83.92
Price Trends
85.68
Negative
87.29
Negative
83.87
Positive
Market Momentum
-0.48
Positive
45.37
Neutral
36.38
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MSM, the sentiment is Negative. The current price of 83.92 is below the 20-day moving average (MA) of 85.77, below the 50-day MA of 85.68, and above the 200-day MA of 83.87, indicating a neutral trend. The MACD of -0.48 indicates Positive momentum. The RSI at 45.37 is Neutral, neither overbought nor oversold. The STOCH value of 36.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MSM.
MSC Industrial Risk Analysis
MSC Industrial disclosed 31 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $1.66B | 20.87 | 19.58% | ― | 12.76% | 36.11% | |
77 Outperform | $1.15B | 17.59 | 22.61% | 3.48% | 0.16% | 2.99% | |
74 Outperform | $9.84B | 25.45 | 22.10% | 0.70% | 4.03% | 5.93% | |
73 Outperform | $47.77B | 28.84 | 48.98% | 0.86% | 4.83% | -3.60% | |
72 Outperform | $46.62B | 39.19 | 32.74% | 2.10% | 6.92% | 5.98% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | $4.52B | 22.93 | 14.84% | 3.96% | -1.35% | -22.24% |
* Industrials Sector Average
MSM
MSC Industrial
83.92
7.29
9.51%
AIT
Applied Industrial Technologies
264.62
21.60
8.89%
DXPE
DXP Enterprises
110.04
19.05
20.94%
FAST
Fastenal Company
41.80
6.73
19.19%
GIC
Global Industrial Company
30.89
8.39
37.29%
GWW
WW Grainger
1,033.33
-9.81
-0.94%
MSC Industrial Corporate Events
Dividends
MSC Industrial Declares Quarterly Cash Dividend for Shareholders
Positive
Dec 18, 2025
On December 18, 2025, MSC Industrial Supply Co. announced that its board of directors declared a regular quarterly cash dividend of $0.87 per share, payable on January 28, 2026, to shareholders of record as of January 14, 2026. The dividend declaration underscores the company’s continued return of capital to shareholders and reflects ongoing confidence in the stability of its cash generation within the industrial distribution and MRO sector.
The most recent analyst rating on (MSM) stock is a Hold with a $95.00 price target. To see the full list of analyst forecasts on MSC Industrial stock, see the MSM Stock Forecast page.
Business Operations and StrategyPrivate Placements and Financing
MSC Industrial Amends Receivables Purchase Agreement
Positive
Dec 12, 2025
On December 10, 2025, MSC Industrial Direct Co., Inc. amended its Receivables Purchase Agreement, originally dated December 19, 2022. The amendment extends the termination date to December 8, 2028, increases the maximum commitment by $50 million to $350 million, removes the credit spread adjustment to the interest rate, and updates the definition of the company’s consolidated net leverage ratio. These changes are expected to impact the company’s financial flexibility and operational strategy positively.
The most recent analyst rating on (MSM) stock is a Hold with a $86.00 price target. To see the full list of analyst forecasts on MSC Industrial stock, see the MSM Stock Forecast page.
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
MSC Industrial Reports Q4 2025 Financial Results
Positive
Oct 23, 2025
On October 23, 2025, MSC Industrial Supply Co. reported its fiscal 2025 fourth quarter and full-year financial results, highlighting a 2.7% year-over-year increase in net sales for the fourth quarter, reaching $978.2 million. Despite a 1.3% decrease in full-year net sales, the company achieved a positive cash flow conversion and returned $229 million to shareholders through dividends and share repurchases. The company’s strategic focus on high-touch solutions, core customer engagement, and cost optimization has led to growth in daily sales and earnings per share, positioning it for profitable growth in fiscal 2026.
The most recent analyst rating on (MSM) stock is a Buy with a $93.00 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.