Monday, April 11, 2016

Seeking Alpha: MSC Industrial May Be Getting Ahead Of Itself

I like MSC Industrial (NYSE:MSM), one of the largest industrial distributors in the country, but that doesn't mean I think it's worth paying any price to own. The shares have done pretty well since my last update, but then so have other distributors like Grainger (NYSE:GWW) and Fastenal (NASDAQ:FAST), as well as Kennametal (NYSE:KMT), a large manufacturer of metalworking tools and a significant MSC supplier. Some of this optimism makes sense as a reaction to the significant pessimism around industrial companies around the turn of the year, as well as the recent upward trends in the Purchasing Manager's Index and Metalworking Business Index.

Management didn't have a lot to say on the call that I considered encouraging, but I do believe that 2016 is still likely to be the low point for the company in terms of revenue performance, and management is doing well with margins. I still believe that MSC can deliver long-term growth of 5% on the top line and around 10% in FCF, but that means the shares are more or less fairly valued today.

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MSC Industrial May Be Getting Ahead Of Itself

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