Manufacturing And Self-Help Come Through For MSC Industrial

I've been skeptical about MSC Industrial's (NYSE:MSM) latest self-help initiatives, but management is providing the best rebuttal possible - good execution. I can, and will, quibble that sales growth should be higher given the underlying strength in manufacturing, but the company is definitely doing better on margins, and that helped drive better fiscal second quarter results - a set of results that should also bode well for the broader multi-industrial space in the upcoming calendar first quarter earnings cycle.

I flipped from neutral to positive on these shares in late February, in part due to valuation/sentiment, and in the short time since, the shares are up about 10% - roughly doubling the performance of the underlying industrial sector. With some positive adjustments to my margin assumptions, I still see around 10% to 20% near-term undervaluation, with longer-term total return potential in the high single-digits.

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Manufacturing And Self-Help Come Through For MSC Industrial