MSC Industrial (MSM)
is now effectively one of the first industrial stocks to report in an
earnings cycle, and MSC's Wednesday report on its fiscal second quarter
(calendar first quarter) brought some relief, but also a reminder of the
exceptional uncertainty that companies are operating within at the
moment. Sales held up about as well as expected, but management declined
to provide guidance given fast-changing end-market dynamics and wider
timing spreads between orders and shipments.
This
year (calendar 2020) is going to be a tougher one than I was expecting,
but I don't think COVID-19 is going to materially change the long-term
trajectory of the business. The bigger issues for MSC management revolve
around whether their plans to reaccelerate growth (to 300bp or more
above market) and recapture above-industry incremental margins can bear
fruit. I remain skeptical, but I do acknowledge that today's share price
offers a decent prospective return for a stock where sentiment has
shifted to a more conservative "show me" stance.
Read more here:
MSC Industrial's Earnings Bring Some Relief, But Uncertainty Remains The Primary Takeaway
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