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1. Company Snapshot

1.a. Company Description

MSC 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.

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1.b. Last Insights on MSM

MSC Industrial Direct Co., Inc.'s recent performance was driven by a new upcycle, as indicated by a Buy rating from analysts. The company's new CEO is driving productivity initiatives, targeting core customers, supplier partnerships, and technology to improve margins and execution. Industry forecasts and analyst estimates support revenue growth of 4.85% and earnings growth of 14.24% for fiscal 2026. Additionally, the company's strong Q1 results, including a solid backlog and demand for infrastructural solutions, contributed to its performance. Furthermore, MSC Industrial's impressive earnings surprise history and positive earnings outlook are also driving its recent performance.

1.c. Company Highlights

2. MSC Industrial Direct's Q1 FY2026 Earnings: A Strong Start

MSC Industrial Direct Co., Inc. reported a robust fiscal 2026 first-quarter performance, with average daily sales rising 4% year-over-year to $966 million. The growth was driven by a 4.2% price benefit, partially offset by a 30 basis point decline in volumes due to the federal government shutdown. Gross margin stood at 40.7%, and adjusted operating margin was 8.4%, resulting in an incremental operating margin of 18% on an adjusted basis. Earnings per share (EPS) came in at $0.925, slightly below estimates of $0.95. The company returned $62 million to shareholders through dividends and share repurchases.

Publication Date: Jan -08

📋 Highlights
  • Average Daily Sales Growth: Increased 4% YoY to $966M, driven by 4.2% price benefits, partially offset by 30 bps volume decline from federal shutdown.
  • Adjusted Operating Margin: Rose to 8.4% with 18% incremental margin, projecting 20% full-year margin under mid-single-digit growth scenarios.
  • Shareholder Returns: $62M returned via dividends and buybacks; free cash flow conversion targeted at 90% with 24.5-25.5% tax rate.
  • Q2 Guidance: 3.5-5% sales growth YoY (4-6% sequential decline) and 7.3-7.9% adjusted operating margin, aided by 50 bps February public-sector benefit.
  • Strategic Initiatives: $1.4K-attendee Growth Forum to drive sales execution; 50 bps revenue shift to Q3 from supplier conference, offsetting Q2 headwinds.

Guidance and Outlook

For the fiscal second quarter, MSC expects average daily sales growth of 3.5-5% compared to the prior year, with a sequential decline of 4-6% from the fiscal first quarter. The adjusted operating margin for the quarter is expected to be 7.3% to 7.9%, up approximately 50 basis points at the midpoint compared to the prior year. The company anticipates maintaining price-cost neutrality, with a price increase in mid-January, and expects core customers to continue growing.

Operational Highlights

The company is focused on reconnecting and growing with core customers, optimizing its sales organization, and leveraging technology to drive speed and consistency in decision-making. The inaugural Growth Forum, featuring 1,400 MSC associates and supplier community members, aims to drive sales execution and growth. Implant sales growth remains a focus, with no slowdown in the pipeline and no shift in emphasis.

Valuation

With a P/E Ratio of 22.12 and an EV/EBITDA of 13.06, the market appears to be pricing in moderate growth expectations. The Dividend Yield stands at 4.22%, indicating an attractive income stream for investors. As the company expects to maintain price-cost neutrality and drive growth through its initiatives, the current valuation metrics suggest a reasonable entry point for investors.

Future Prospects

The company's guidance implies year-over-year growth of a little more than 5% in January and February, driven by core customer acceleration and further inflation working through the P&L. With expected free cash flow conversion of approximately 90% and adjusted incremental operating margins of approximately 20% under a mid-single-digit growth scenario, MSC Industrial Direct is poised for a strong fiscal year.

3. NewsRoom

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MSC Industrial Direct Company, Inc. (NYSE:MSM) Given Average Rating of “Hold” by Brokerages

Feb -06

Source: defenseworld.net

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Metalsource Mining Amends Marketing Agreement with ITG

Jan -22

Source: newsfilecorp.com

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Metalsource Mining Inc. Provides Drilling Update at Silver Hill Project

Jan -22

Source: newsfilecorp.com

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MSC Industrial Direct Company, Inc. $MSM Stake Increased by Inscription Capital LLC

Jan -21

Source: defenseworld.net

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RETRANSMISSION: Metalsource Announces Change of Directors

Jan -20

Source: newsfilecorp.com

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Metalsource Announces Change of Directors

Jan -19

Source: newsfilecorp.com

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Market Today: Verizon outage, Tesla FSD shift, banks in focus

Jan -14

Source: gurufocus.com

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First Look: Alphabet $4T, Nvidia China OK, Boeing Tops Airbus

Jan -14

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.68%)

6. Segments

Manufacturing Heavy

Expected Growth: 2.0%

MSC Industrial Direct Co., Inc.'s Manufacturing Heavy segment growth of 2.0% is driven by increasing demand for industrial equipment and machinery, growth in e-commerce and digital platforms, and strategic acquisitions. Additionally, the company's focus on cost savings initiatives, operational efficiency, and investments in supply chain optimization are contributing to its growth.

Manufacturing Light

Expected Growth: 1.5%

MSC Industrial Direct Co.'s 1.5% growth in Manufacturing Light is driven by increasing demand for energy-efficient solutions, rising adoption of automation and robotics, and growing need for customized lighting solutions in industries such as automotive and aerospace. Additionally, the company's strategic acquisitions and investments in digitalization are expected to further boost growth.

Other

Expected Growth: 0.8%

MSC Industrial Direct Co., Inc.'s 0.8 growth is driven by increasing demand for industrial supplies, expansion into e-commerce, and strategic acquisitions. Additionally, the company's focus on cost savings initiatives, investments in digital capabilities, and a strong balance sheet contribute to its growth momentum.

Public Sector

Expected Growth: 1.2%

The 1.2% growth in the Public Sector segment of MSC Industrial Direct Co., Inc. is driven by increased government spending on infrastructure projects, a rise in demand for maintenance, repair, and operations (MRO) products, and the company's strategic efforts to expand its presence in the government sector through targeted marketing and sales initiatives.

Retail/Wholesale

Expected Growth: 1.8%

MSC Industrial Direct Co., Inc.'s Retail/Wholesale segment growth of 1.8% is driven by increasing demand for maintenance, repair, and operations (MRO) products, expansion of e-commerce platforms, and strategic acquisitions. Additionally, the company's focus on vending and inventory management solutions, as well as its efforts to improve operational efficiency, contribute to the segment's growth.

Commercial Services

Expected Growth: 2.2%

MSC Industrial Direct Co.'s Commercial Services segment growth of 2.2% is driven by increasing demand for maintenance, repair, and operations (MRO) products from industrial customers, expansion of e-commerce capabilities, and strategic pricing initiatives. Additionally, the company's focus on supply chain optimization and inventory management has improved operational efficiency, contributing to the segment's growth.

7. Detailed Products

Metalworking

MSC Industrial Direct Co., Inc. offers a wide range of metalworking products, including cutting tools, abrasives, and coolants, designed to improve productivity and efficiency in metal fabrication and machining operations.

Maintenance, Repair, and Operations (MRO)

MSC Industrial Direct Co., Inc. provides a broad range of MRO products, including fasteners, adhesives, and lubricants, designed to support maintenance, repair, and operational activities in various industries.

Safety and Janitorial

MSC Industrial Direct Co., Inc. offers a variety of safety and janitorial products, including personal protective equipment, cleaning supplies, and waste management solutions, designed to promote a safe and healthy work environment.

Material Handling and Packaging

MSC Industrial Direct Co., Inc. provides a range of material handling and packaging products, including conveyor systems, pallets, and packaging materials, designed to improve efficiency and productivity in warehousing and logistics operations.

Janitorial and Sanitation

MSC Industrial Direct Co., Inc. offers a variety of janitorial and sanitation products, including cleaning supplies, paper products, and waste management solutions, designed to maintain cleanliness and hygiene in various settings.

Fluid Management

MSC Industrial Direct Co., Inc. provides a range of fluid management products, including pumps, valves, and hoses, designed to support fluid handling and transfer operations in various industries.

8. MSC Industrial Direct Co., Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for MSC Industrial Direct Co., Inc. is medium due to the availability of alternative products and services from competitors.

Bargaining Power Of Customers

The bargaining power of customers for MSC Industrial Direct Co., Inc. is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for MSC Industrial Direct Co., Inc. is medium due to the company's dependence on a few large suppliers.

Threat Of New Entrants

The threat of new entrants for MSC Industrial Direct Co., Inc. is low due to the high barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry for MSC Industrial Direct Co., Inc. is high due to the competitive nature of the industry and the presence of several large competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.06%
Debt Cost 5.75%
Equity Weight 73.94%
Equity Cost 8.47%
WACC 7.76%
Leverage 35.25%

11. Quality Control: MSC Industrial Direct Co., Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
MSC Industrial Direct Co

A-Score: 6.0/10

Value: 4.0

Growth: 3.7

Quality: 6.0

Yield: 8.0

Momentum: 6.0

Volatility: 8.3

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Applied Industrial Technologies

A-Score: 5.3/10

Value: 3.1

Growth: 7.1

Quality: 7.2

Yield: 2.0

Momentum: 4.5

Volatility: 8.0

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Watsco

A-Score: 5.2/10

Value: 3.1

Growth: 6.8

Quality: 7.1

Yield: 6.0

Momentum: 1.0

Volatility: 7.3

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WESCO

A-Score: 5.0/10

Value: 4.5

Growth: 7.8

Quality: 3.9

Yield: 1.0

Momentum: 8.0

Volatility: 5.0

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Pool

A-Score: 4.7/10

Value: 3.6

Growth: 6.8

Quality: 6.1

Yield: 3.0

Momentum: 1.5

Volatility: 7.0

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Stock-Card
Core & Main

A-Score: 4.6/10

Value: 3.6

Growth: 8.4

Quality: 5.4

Yield: 0.0

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

94.18$

Current Price

94.18$

Potential

-0.00%

Expected Cash-Flows