MSC Industrial Direct Co., Inc. (MSM) Market Cap
MSC Industrial Direct Co., Inc. has a market capitalization of $5.42B.
Financials based on reported quarter end 2026-02-28
Price: $97.12
▼ -0.01 (-0.01%)
Market Cap: 5.42B
NYSE · time unavailable
CEO: Martina McIsaac
Sector: Industrials
Industry: Industrial - Distribution
IPO Date: 1995-12-15
Website: https://www.mscdirect.com
MSC Industrial Direct Co., Inc. (MSM) - Company Information
Market Cap: 5.42B · Sector: Industrials
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.
Analyst Sentiment
58%
Buy
Based on 28 ratings
Analyst 1Y Forecast: $90.75
Average target (based on 3 sources)
Consensus Price Target
Low
$85
Median
$94
High
$95
Average
$91
Downside: -6.0%
Price & Moving Averages
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Fundamentals Overview
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📊 AI Financial Analysis
Powered by StockMarketInfoEarnings Data: Q Ending 2026-02-28
"Headline (latest quarter ended 2026-02-28): Revenue $917.8M, Net Income $41.8M, EPS $0.76. QoQ, Revenue declined from $965.7M to $917.8M (-5.0%) and Net Income fell from $51.8M to $41.8M (-19.3%), indicating weakening earnings power. YoY comparisons for the “same quarter last year” are not possible with the provided dataset (no 2025-02 quarter present). Over the last four quarters, Revenue has generally drifted down from ~$978M to ~$918M, while Net Income has also compressed from ~$56.5–$56.8M to ~$41.8M. Net margin (Net Income/Revenue) contracted to ~4.6% from ~5.9%–5.6% earlier in the period, while EPS moved from ~$1.02–$1.01 down to $0.76. Cash flow remains positive (FCF positive in each reported quarter), but dividends have been larger than FCF in multiple periods (e.g., payout ratio ~1.16x most recently; dividends yield ~0.9%), which is not ideal for cash durability. Balance sheet resilience is reasonable: Total equity is stable around ~$1.37B–$1.40B and net debt is moderate, though it’s slightly higher than the 2025-08 level. Shareholder returns look supportive: the stock is up 21.45% over 1 year, which is likely the main driver of total return given the low dividend yield (~0.9%). Valuation is richer than earlier (P/E rising to ~31.3 from ~19.9)."
Revenue Growth
QoQ revenue fell ~5.0% (from $965.7M to $917.8M). Over 4 quarters, revenue trended down (~$978M to ~$918M). YoY growth for the same quarter last year is not available from the provided history.
Profitability
Net income fell ~19.3% QoQ and net margin contracted to ~4.6% from ~5.6%–5.9% earlier in the period. EPS declined from ~0.93–1.01 to 0.76.
Cash Flow Quality
FCF is positive, but dividends have consumed more than FCF recently (payout ratio ~1.16x). Dividend yield is low (~0.9%), suggesting limited cushion if earnings remain soft.
Leverage & Balance Sheet
Total equity is broadly stable (~$1.38B–$1.40B). Total assets are slightly down QoQ/over the 4-quarter window, while net debt is moderate but somewhat elevated versus the 2025-08 quarter.
Shareholder Returns
1-year price appreciation is strong (+21.45%), exceeding the 20% momentum threshold. Dividend yield is modest (~0.9%), so total return is likely dominated by capital appreciation.
Analyst Sentiment & Valuation
Trading near the consensus target (price $94.71 vs consensus ~$91.33). Valuation has expanded materially (P/E ~31.3 vs ~19.9 three quarters earlier).
Disclaimer:This analysis is AI-generated for informational purposes only. Accuracy is not guaranteed and this does not constitute financial advice.
MSM reported Q2 fiscal 2026 ADS growth of 2.9%, below the 4.5% midpoint outlook, largely due to transitional volume disruption from the final sales organization restructuring plus a ~100 bps weather/partial shutdown headwind. Despite the volume softness (volumes -4% YoY), the quarter showed quality earnings: gross margin of 41.1% (+10 bps YoY) and adjusted operating margin of 7.5% (+40 bps YoY), driven by pricing actions (noted ~6.5% price contribution to daily sales) and cost discipline (adjusted Opex improved +20 bps as % of sales). GAAP EPS was $0.76 and adjusted EPS $0.82 (+14% YoY). Management expects acceleration in April–May, guiding Q3 ADS +5% to +7% and adjusted operating margin 9.7%–10.3% (with March +4% assuming a ~100 bps Good Friday headwind). Upside remains supported by vending/In-Plant growth and an AI-enabled supplier growth forum generating ~$500M opportunity potential; key risks are continued input-price volatility (tungsten/carbide price notices 7%–15%) and demand timing sensitivity amid geopolitical and macro uncertainty.
Growth Catalysts
- ADS growth 2.9% aided by price contribution of ~6.5% to daily sales
- Solutions momentum: vending machines installed +8% YoY to ~30,400
- In-Plant expansion: +9% YoY to 423 programs; vending and In-Plant avg daily sales each +8% YoY and ~20% of net sales each
- Supplier growth forum: AI-assisted prescheduled meetings (3,000) generated ~10,000 opportunities with ~$500M near-/long-term potential
Business Development
- Supplier growth forum with 400 suppliers and >1,000 MSC associates; AI-identified white-space overlap and joint growth opportunities
Financial Highlights
- ADS growth 2.9% vs 4.5% midpoint of outlook (miss)
- Gross margin 41.1% (+10 bps YoY; ~+40 bps sequential) driven by price actions in F1Q/F2Q and pricing process professionalization
- Adjusted operating expenses improved +20 bps YoY as % of sales; led to adjusted operating margin 7.5% (+40 bps YoY) within outlook range (7.3%–7.9%)
- Adjusted operating margin supported 2Q adjusted incremental margin of 21% (toward upper end of expectations)
- Reported GAAP EPS $0.76 vs $0.70 prior year; adjusted EPS $0.82 vs $0.72 prior year (+14%)
- Volume headwind: -4% YoY volumes with combined weather + partial government shutdown impact of ~100 bps
- Operating cash flow conversion 224% in quarter; free cash flow conversion ~173% in 2Q (86% FYTD)
Capital Funding
- Net debt ~ $466M (~1.2x EBITDA)
- AR securitization facility amended: capacity increased by $50M during the quarter
- Capital expenditures ~ $21M (down ~$9M YoY)
- Capital returned to shareholders: ~$49M in fiscal 2Q; ~$110M FYTD (dividends + share repurchases)
Strategy & Ops
- Completed last round of sales organization structural changes and accompanying headcount reductions: impacted ~130 customer-facing associates (noted reduction was designed for 130; actual quarter-over-quarter sales headcount down ~158, with residual impacts as roles were filled)
- Resource model simplified from overlapping multi-rep coverage to geographically aligned sales/service organization
- Change affected mainly National Accounts and larger core customers (face/ownership changes through consolidation)
- Vending and In-Plant momentum unaffected per operational statistics
- Compensation/field culture shift: hunting and complacency removed from compensation; higher bar and revised compensation/responsibilities
- Integrated OEM fastener business into core field sales/field service responsibilities (noted OEM business growing mid-teens in Feb, higher in Mar)
- Automation/AI emphasis: embedded AI into planning/procurement and deployed AI to drive CFC productivity and reduce attrition replacement need
Market Outlook
- Guidance for fiscal 3Q (vs prior year): average daily sales +5% to +7%
- Guidance assumes fiscal March ADS estimate ~+4% including ~100 bps headwind from Good Friday timing
- Adjusted operating margin guidance for fiscal 3Q: 9.7% to 10.3%
- Implied adjusted incremental margin ~25% at midpoint; full-year target adjusted incremental margin ~20% with mid-single-digit growth outcome
Risks & Headwinds
- Weather and partial government shutdown: ~100 bps combined headwind on volumes
- Organizational transition risk: customer coverage gaps during warm handoffs; higher-than-expected attrition from compensation/responsibility changes and resulting uncovered periods
- Geopolitical uncertainty (war with Iran) and rising fuel costs increasing uncertainty despite no meaningful disruption observed
- Tungsten/carbide cutting tool input costs: supplier price notices in range 7%–15% (likely effective May–June); scrap carbide market up ~500% since prior discussion; potential supply constraints
- Potential demand uncertainty: management stated customers are focusing on supply security; risk of timing pushouts remains a consideration (no change in demand slowing observed so far)
Sentiment: MIXED
Note: This summary was synthesized by AI from the MSM Q2 2026 earnings transcript. Financial data is complex; please verify all metrics against official SEC filings before making investment decisions.
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