Monday, April 16, 2018

MSC Industrial Still Looks A Little Underwhelming

Patience hasn't proved all that rewarding with MSC Industrial (MSM), as the shares have not only lagged peers like Grainger (GWW) and Fastenal (FAST) and suppliers like Kennametal (KMT) but are basically flat for the past year. The debate continues as to whether MSC Industrial's issues are predominantly driven by cyclical factors, or whether increased online competition and the expansion of Amazon (AMZN) into industrial distribution has permanently altered price transparency and the competitive balance.

I admit that I find it troubling that MSC reported only mid-single-digit organic growth despite Gardner's Metalworking Index hitting its highest level in seven years. A return to positive pricing was nice to see, as was the operating leverage, but this remains a "show me" story where valuation is not all that compelling.

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MSC Industrial Still Looks A Little Underwhelming

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