MRC Global Leveraging Renewed Energy Capex Investments, But Looks Undervalued

The recovery in the U.S. onshore oil & gas sector has been a significant catalyst for MRC Global (MRC), the world’s largest distributor of pipes, valves, and fittings (or PVF) and other equipment to the energy sector. With the shares up almost 70% over the past three years, the stock has easily outperformed fellow distributor NOW (DNOW), as well as the broader oil/gas services and equipment sector. The performance over the past year hasn’t been as strong, though, with NOW handily outperforming MRC Global, which I believe is due in part to greater upstream leverage.

It would appear that there is still upside in MRC shares, as the company benefits from ongoing revenue re-acceleration and improving margin leverage. I do expect the growth drivers to transition more toward the midstream and downstream businesses in the coming years, but I believe there is value here up into the low-to-mid $20’s.

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MRC Global Leveraging Renewed Energy Capex Investments, But Looks Undervalued