NYSE:MSM

Stock Analysis Report

Executive Summary

MSC Industrial Direct Co., Inc., together with its subsidiaries, distributes metalworking and maintenance, repair, and operations (MRO) products in the United States, Canada, Mexico, and the United Kingdom.

Rewards

Trading at 51.5% below its fair value

Earnings are forecast to grow 7.96% per year

Pays a high and reliable dividend of 4.57%

Risk Analysis

No risks detected for MSM from our risk checks.


Snowflake Analysis

Flawless balance sheet 6 star dividend payer.


Similar Companies

Share Price & News

How has MSC Industrial Direct's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: MSM has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-10.7%

MSM

-11.2%

US Trade Distributors

-10.6%

US Market


1 Year Return

-24.1%

MSM

-1.6%

US Trade Distributors

5.2%

US Market

Return vs Industry: MSM underperformed the US Trade Distributors industry which returned 0.8% over the past year.

Return vs Market: MSM underperformed the US Market which returned 10.2% over the past year.


Shareholder returns

MSMIndustryMarket
7 Day-10.7%-11.2%-10.6%
30 Day-9.6%-10.4%-8.5%
90 Day-13.3%-10.4%-4.6%
1 Year-15.7%-24.1%0.3%-1.6%7.4%5.2%
3 Year-28.6%-39.0%7.0%2.0%31.7%23.2%
5 Year8.2%-11.8%30.4%20.6%56.4%39.3%

Price Volatility Vs. Market

How volatile is MSC Industrial Direct's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is MSC Industrial Direct undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: MSM ($65.64) is trading below our estimate of fair value ($135.2)

Significantly Below Fair Value: MSM is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: MSM is good value based on its PE Ratio (12.9x) compared to the Trade Distributors industry average (15.4x).

PE vs Market: MSM is good value based on its PE Ratio (12.9x) compared to the US market (17.1x).


Price to Earnings Growth Ratio

PEG Ratio: MSM is poor value based on its PEG Ratio (1.6x)


Price to Book Ratio

PB vs Industry: MSM is overvalued based on its PB Ratio (2.4x) compared to the US Trade Distributors industry average (1.4x).


Next Steps

Future Growth

How is MSC Industrial Direct forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

8.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MSM's forecast earnings growth (8% per year) is above the savings rate (1.7%).

Earnings vs Market: MSM's earnings (8% per year) are forecast to grow slower than the US market (13.2% per year).

High Growth Earnings: MSM's earnings are forecast to grow, but not significantly.

Revenue vs Market: MSM's revenue (4.1% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: MSM's revenue (4.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if MSM's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has MSC Industrial Direct performed over the past 5 years?

7.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MSM has high quality earnings.

Growing Profit Margin: MSM's current net profit margins (8.3%) are lower than last year (10.5%).


Past Earnings Growth Analysis

Earnings Trend: MSM's earnings have grown by 7.4% per year over the past 5 years.

Accelerating Growth: MSM's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: MSM had negative earnings growth (-18.5%) over the past year, making it difficult to compare to the Trade Distributors industry average (6.2%).


Return on Equity

High ROE: MSM's Return on Equity (18.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is MSC Industrial Direct's financial position?


Financial Position Analysis

Short Term Liabilities: MSM's short term assets ($1.2B) exceed its short term liabilities ($403.8M).

Long Term Liabilities: MSM's short term assets ($1.2B) exceed its long term liabilities ($419.6M).


Debt to Equity History and Analysis

Debt Level: MSM's debt to equity ratio (26.5%) is considered satisfactory.

Reducing Debt: MSM's debt to equity ratio has reduced from 37.3% to 26.5% over the past 5 years.

Debt Coverage: MSM's debt is well covered by operating cash flow (83.7%).

Interest Coverage: MSM's interest payments on its debt are well covered by EBIT (26.9x coverage).


Balance Sheet

Inventory Level: MSM has a high level of physical assets or inventory.

Debt Coverage by Assets: MSM's debt is covered by short term assets (assets are 2.9x debt).


Next Steps

Dividend

What is MSC Industrial Direct's current dividend yield, its reliability and sustainability?

4.72%

Current Dividend Yield


Dividend Yield vs Market

company4.7%marketbottom25%1.6%markettop25%4.1%industryaverage3.0%forecastin3Years7.4%

Current dividend yield vs market & industry

Notable Dividend: MSM's dividend (4.57%) is higher than the bottom 25% of dividend payers in the US market (1.53%).

High Dividend: MSM's dividend (4.57%) is in the top 25% of dividend payers in the US market (3.96%)


Stability and Growth of Payments

Stable Dividend: MSM's dividends per share have been stable in the past 10 years.

Growing Dividend: MSM's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (54.4%), MSM's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: MSM's dividends in 3 years are forecast to be covered by earnings (62.7% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

7.1yrs

Average management tenure


CEO

Erik Gershwind (48yo)

7.1yrs

Tenure

US$3,871,786

Compensation

Mr. Erik David Gershwind has been the Chief Executive Officer of MSC Industrial Direct Co. Inc. since January 1, 2013. Mr. Gershwind has also been the President of MSC Industrial Direct Co. Inc. since Octo ...


CEO Compensation Analysis

Compensation vs Market: Erik's total compensation ($USD3.87M) is about average for companies of similar size in the US market ($USD4.98M).

Compensation vs Earnings: Erik's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Erik Gershwind
President7.1yrsUS$3.87m2.87% $104.2m
Steve Armstrong
Senior VP11.3yrsUS$1.05m0.017% $612.7k
Steven Baruch
Executive VP and Chief Strategy & Marketing Officer3.3yrsUS$851.48k0.014% $491.2k
Douglas Jones
Executive VP & Chief Supply Chain Officer14.2yrsUS$1.08m0.023% $847.2k
Gregory Clark
VP of Finance0.08yrsno data0.0024% $85.4k
Charles Bonomo
Senior VP & Chief Information Officer12.6yrsno data0.0087% $314.9k
John Chironna
VP of Investor Relations & Treasurer7.3yrsno datano data
Paul Mason
Director of Corporate Communications5.1yrsno datano data
Edward Martin
Senior Vice President of Sales & Customer Success0.7yrsno datano data
Kari Heerdt
Senior Vice President of New Business Innovation & Transformation0yrsUS$913.59k0.015% $563.2k

7.1yrs

Average Tenure

51yo

Average Age

Experienced Management: MSM's management team is seasoned and experienced (7.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Erik Gershwind
President7.1yrsUS$3.87m2.87% $104.2m
Louise Goeser
Independent Director11.1yrsUS$214.25k0.029% $1.1m
Mitchell Jacobson
Non-Executive Chairman22.1yrsUS$402.60k11.54% $419.5m
Steven Paladino
Independent Director4.4yrsUS$207.65k0.010% $373.0k
Denis Kelly
Independent Director23.8yrsUS$220.15k0.017% $617.0k
Philip Peller
Lead Director12.2yrsUS$224.25k0.027% $977.7k
Jonathan L. Byrnes
Independent Director9.9yrsUS$204.25k0.025% $924.6k
Michael Kaufmann
Independent Director4.4yrsUS$207.65k0.010% $373.0k

10.5yrs

Average Tenure

67yo

Average Age

Experienced Board: MSM's board of directors are seasoned and experienced ( 10.5 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: MSM insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

MSC Industrial Direct Co., Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: MSC Industrial Direct Co., Inc.
  • Ticker: MSM
  • Exchange: NYSE
  • Founded: 1941
  • Industry: Trading Companies and Distributors
  • Sector: Capital Goods
  • Market Cap: US$3.636b
  • Shares outstanding: 55.39m
  • Website: https://www.mscdirect.com

Number of Employees


Location

  • MSC Industrial Direct Co., Inc.
  • 75 Maxess Road
  • Melville
  • New York
  • 11747
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
MSMNYSE (New York Stock Exchange)YesClass A Common StockUSUSDDec 1995
98MDB (Deutsche Boerse AG)YesClass A Common StockDEEURDec 1995

Biography

MSC Industrial Direct Co., Inc., together with its subsidiaries, distributes metalworking and maintenance, repair, and operations (MRO) products in the United States, Canada, Mexico, and the United Kingdom. The company’s MRO products comprise 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. It offers approximately 1.7 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. The company serves through its distribution network of 99 branch offices and 12 customer fulfillment centers. It serves individual machine shops, Fortune 100 manufacturing companies, and government agencies, as well as manufacturers of various sizes. The company was founded in 1941 and is headquartered in Melville, New York. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/28 00:19
End of Day Share Price2020/02/27 00:00
Earnings2019/11/30
Annual Earnings2019/08/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.