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GIC

Global Industrial NYSE:GIC Stock Report

Last Price

US$26.38

Market Cap

US$1.0b

7D

-7.4%

1Y

-30.6%

Updated

27 Sep, 2022

Data

Company Financials +
GIC fundamental analysis
Snowflake Score
Valuation3/6
Future Growth0/6
Past Performance4/6
Financial Health5/6
Dividends2/6

GIC Stock Overview

Global Industrial Company, through its subsidiaries, operates as a value-added industrial distributor of industrial and maintenance, repair, and operation (MRO) products in North America.

Global Industrial Company Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Global Industrial
Historical stock prices
Current Share PriceUS$26.38
52 Week HighUS$45.21
52 Week LowUS$26.19
Beta0.89
1 Month Change-14.43%
3 Month Change-20.88%
1 Year Change-30.58%
3 Year Change19.64%
5 Year Change-4.04%
Change since IPO31.90%

Recent News & Updates

Sep 18

Global Industrial Company: Balancing The Cost Structure Will Be The Key

Summary An increased share of large enterprise accounts would benefit Global Industrial Company's profit margin. Higher costs related to the Canadian distribution network can mitigate operating profit growth in 2H 2022. It has low debt and ample liquidity, but negative free cash flow is a concern. Relative to its peers, the stock is reasonably valued with a negative bias. GIC Juggles Various Factors Global Industrial Company (GIC) distributes industrial and MRO products in North America. My previous article discussed GIC's marketing efforts and brand leveraging. Recently, it has forayed into the high-growth health care vertical to boost revenue growth. Apart from focusing on large enterprise accounts, it has enhanced the new digital e-commerce platform to improve customer experience. The commodity price inflation has eased lately. As the supply chain reliability improves, GIC's inventory level declines, leading to lower working capital requirements. As a result, its weak cash flows can turn over in 2H 2022. However, the build-out and transition operations related to the Canadian distribution network can weigh on the profit margin. It has low leverage and ample liquidity, so the financial risks are limited. Given my revenue and EBITDA estimates, I think investors might want to hold the stock, but with an expectation of a range-bound return. Marketing Activity And Sales Strategies One of the critical strategic changes in recent times has been its diversification into various end markets, including the large government and private sectors. GIC's foray into the health care vertical is a case in point. Because the management emphasizes product availability for its customers, the supply chain disruption witnessed over the past few quarters resulted in higher inventory levels. Not only that, but it also came at a high cost following inflation in ocean freight. As we enter 2H 2022, ocean cost pressure appears to moderate while the supply chain reliability improves. So, the inventory level is declining, leading to lower working capital requirements and a cash flow improvement. In the long term, sourcing material from higher-margin channels and optimizing the freight profile would pay off for the company. The other aspect of GIC's strategy is to enhance the new digital e-commerce platform. The platform focuses on mobile navigation, auto-reorder functionality, personalized recommendations, and faster checkout. Such features can improve customer experience and enhance its digital footprint. SG&A Costs To Rise Federal Reserve Economic Data The Producer Price Index (iron & steel products) has increased by 23% in the past year until July 2022. However, it has stabilized over the past three months. The management sees the ocean freight costs starting to come down. Although the supply side is mixed, some price flexibility emerged on the domestic and international sides. Also, during Q2, the company's SG&A costs declined by 100 basis points over the past year as a percentage of net sales. The management expects higher levels of SG&A in 2H 2022 due to the Canadian distribution network expansion and its investments in e-commerce. The costs of build-out and transition operations in the new Canadian facility would happen in the second half, thus leading to excess charges. So, the SG&A costs would remain high in 2022. Nonetheless, I expect the margin growth to improve in the medium term. Q2 Drivers And Margin Analysis Seeking Alpha The company's revenues increased by 10.4% in Q2 2022 compared to Q1. Much of the topline gain can be attributed to higher revenues from the US operation. The open order book, however, has remained flat since the start of the year. The management expects to fill back-order positions faster in 2H 2022. The company's gross profit increased by 4.8% quarter-over-quarter. Its adjusted EBITDA increased marginally (3.3% up) from Q1 to Q2. Higher freight fuel surcharges and excess promotional activities heightened operating costs in Q2. Also, higher-cost inventory flowed through from the previous quarter in Q2. Cash Flows And Dividend In 1H 2022, increased inventory balances, accounts receivable, and reduced accrued expenses led to higher working capital requirements. These factors pushed GIC's cash flow from operations (or CFO) much lower to the negative territory compared to a positive CFO a year ago. So, free cash flow (or FCF) also turned negative in 1H 2022. GIC currently pays an annual dividend of $0.72, which translates into a 2.42% dividend yield. Its debt-to-equity ratio was much lower (0.16x) than its peers (FAST, MSM, and MRC). Its liquidity was $64 million as of June 30, 2022. Since 2021, however, it has added debt to its balance sheet because it invested in inventory to support longer lead times. Relative Valuation And Analyst Recommendations Seeking Alpha The company's EV/EBITDA multiple (10.5x) is lower than its average peers' (FAST, DNOW, and MRC). GIC's forward EV/EBITDA multiple expansion is in contrast to its peers' EV/EBITDA contraction. This typically results in a much lower EV/EBITDA multiple than peers. So, the stock is reasonably valued, with a negative bias, on a relative basis. Seeking Alpha According to Seeking Alpha, only one sell-side analyst rated GIC a "buy" in the past 90 days (including "strong buy"), while one recommended a "hold." None of the analysts rated it a "sell." The Wall Street analysts' estimates suggest an 82% upside at the current price. Why Do I Keep My Rating Unchanged? In my previous article, I discussed many positive factors while pointing out some challenges for GIC. At the end of 2021, I noticed that the company's association with private brands was producing a high-profit margin, especially with its digital and multi-channel sales model for product category expansion. However, higher input costs and supply chain constraints led to increased variable selling expenses and delays in order fulfillment. In the article, I wrote: The private brand remains a critical focus because of its high-profit margin. The company's end-to-end purchase, service, and digital and multi-channel sales help improve operating margin. On the other hand, sales headwinds in Canada and commodity price inflation can mitigate a part of the expected profit gains.

Aug 29
Should You Think About Buying Global Industrial Company (NYSE:GIC) Now?

Should You Think About Buying Global Industrial Company (NYSE:GIC) Now?

Global Industrial Company ( NYSE:GIC ), is not the largest company out there, but it saw significant share price...

Aug 11

Global Industrial goes ex dividend tomorrow

Global Industrial (NYSE:GIC) has declared $0.18/share quarterly dividend, in line with previous. Payable Aug. 22; for shareholders of record Aug. 15; ex-div Aug. 12. See GIC Dividend Scorecard, Yield Chart, & Dividend Growth.

Shareholder Returns

GICUS Trade DistributorsUS Market
7D-7.4%-6.7%-5.8%
1Y-30.6%-12.7%-22.1%

Return vs Industry: GIC underperformed the US Trade Distributors industry which returned -14.5% over the past year.

Return vs Market: GIC underperformed the US Market which returned -23.7% over the past year.

Price Volatility

Is GIC's price volatile compared to industry and market?
GIC volatility
GIC Average Weekly Movement6.0%
Trade Distributors Industry Average Movement5.7%
Market Average Movement6.9%
10% most volatile stocks in US Market15.7%
10% least volatile stocks in US Market2.8%

Stable Share Price: GIC is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: GIC's weekly volatility (6%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19491,480Barry Litwinhttps://www.globalindustrial.com

Global Industrial Company, through its subsidiaries, operates as a value-added industrial distributor of industrial and maintenance, repair, and operation (MRO) products in North America. The company offers industrial and MRO products under Global, GlobalIndustrial.com, Nexel, Paramount, and Interion trademarks. It offers products, including storage and shelving, safety and security, carts and trucks, HVAC and fans, furniture and decor, material handling, janitorial and facility maintenance, workbenches and shop desks, tools and instruments, plumbing and pumps, office and school supplies, packaging and shipping, lighting and electrical, food service and retail, medical and laboratory, motors and power transmission, building supplies, machining, fasteners and hardware, vehicle maintenance, and raw materials.

Global Industrial Company Fundamentals Summary

How do Global Industrial's earnings and revenue compare to its market cap?
GIC fundamental statistics
Market CapUS$1.00b
Earnings (TTM)US$87.50m
Revenue (TTM)US$1.15b

11.4x

P/E Ratio

0.9x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
GIC income statement (TTM)
RevenueUS$1.15b
Cost of RevenueUS$726.70m
Gross ProfitUS$419.80m
Other ExpensesUS$332.30m
EarningsUS$87.50m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)2.31
Gross Margin36.61%
Net Profit Margin7.63%
Debt/Equity Ratio16.0%

How did GIC perform over the long term?

See historical performance and comparison

Dividends

2.7%

Current Dividend Yield

29%

Payout Ratio