MSC Industrial Direct Co., Inc. Just Missed EPS By 5.7%: Here's What Analysts Think Will Happen Next

The quarterly results for MSC Industrial Direct Co., Inc. (NYSE:MSM) were released last week, making it a good time to revisit its performance. Revenues of US$954m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$1.22, missing estimates by 5.7%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for MSC Industrial Direct

Taking into account the latest results, MSC Industrial Direct's nine analysts currently expect revenues in 2024 to be US$4.05b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$5.88, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$4.09b and earnings per share (EPS) of US$6.10 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$108, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on MSC Industrial Direct, with the most bullish analyst valuing it at US$124 and the most bearish at US$95.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that MSC Industrial Direct's revenue growth is expected to slow, with the forecast 1.4% annualised growth rate until the end of 2024 being well below the historical 4.3% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.9% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than MSC Industrial Direct.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for MSC Industrial Direct. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that MSC Industrial Direct's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple MSC Industrial Direct analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for MSC Industrial Direct that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.