I was cautious on MSC Industrial (NYSE:MSM) a quarter ago, and the stock's slightly negative performance since then (down about 1%) is better than I'd expected - not to mention better than what other distributors like Grainger (NYSE:GWW), Fastenal (NASDAQ:FAST), and Lawson (NASDAQ:LAWS) have managed over the same time.
And yet, the operating environment remains severely challenged - the metalworking index remains in contraction, industrial production is soft, and MSC's core heavy manufacturing sector is still struggling, not to mention ongoing pressure on industrial distributors as a group.
While MSC Industrial did get a bump after fiscal fourth quarter earnings, I think a lot of that was relief and the shares look more or less fairly priced right now. I'm still looking for mid single-digit revenue growth and high single-digit FCF growth, and I do expect an eventual recovery in manufacturing and industrial MRO demand, but I still also believe that distributors are looking at a more challenging future.
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MSC Industrial Paddling Hard Just To Stay In Place