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1. Company Snapshot

1.a. Company Description

MSC Industrial Direct Co., Inc., together with its subsidiaries, distributes metalworking and maintenance, repair, and operations (MRO) products and services in the United States, Canada, Mexico, and the United Kingdom.Its MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock products, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components, and electrical supplies.The company offers approximately 1.9 million stock-keeping units through its catalogs and brochures; e-commerce channels, including its Website, mscdirect.com; inventory management solutions; and call-centers and branches.


It operates through a distribution network of 28 branch offices, 11 customer fulfilment centers, and seven regional inventory centers.The company serves individual machine shops, Fortune 1000 manufacturing companies, and government agencies, as well as manufacturers of various sizes.MSC Industrial Direct Co., Inc.


was founded in 1941 and is headquartered in Melville, New York.

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1.b. Last Insights on MSM

MSC Industrial Direct Co., Inc.'s recent performance has been driven by several positive factors. The company's Q4 earnings beat, with quarterly earnings of $1.09 per share, exceeding the Zacks Consensus Estimate of $1.03 per share. Additionally, the company has been upgraded to a Zacks Rank #1 (Strong Buy), reflecting growing optimism about its earnings prospects. Institutional investors, such as Advisors Asset Management Inc. and Bessemer Group Inc., have also increased their holdings in the company. Furthermore, the company's presentation at the Stephens Annual Investment Conference and Baird 55th Annual Global Industrial Conference has garnered attention from investors. A director of the company has also purchased 6,666 shares, which can be seen as a positive sign for the manufacturing industry.

1.c. Company Highlights

2. MSC Industrial Direct's Q4 FY2025 Earnings: A Strong Finish

MSC Industrial Direct reported a robust fourth quarter, with average daily sales improving 2.7% year-over-year, driven by the return to growth in its core customer base and continued strength in the public sector. The company's adjusted operating expenses as a percentage of sales performed in line with the prior year. The reported operating margin for the fiscal year was 8% compared to 10.2% in the prior year. Earnings per share (EPS) came in at $1.09, beating analyst estimates of $1.03.

Publication Date: Oct -27

📋 Highlights
  • Q4 Average Daily Sales Growth:: 2.7% year-over-year driven by core customer recovery and public sector strength.
  • Core Customer Sales Momentum:: 4.1% year-over-year growth from pricing, e-commerce upgrades, and seller optimization.
  • Public Sector Performance:: 8.5% year-over-year growth in Q4, with 10% sequential increase reflecting sustained demand.
  • Vending Footprint Expansion:: Installed vending count grew 10% year-over-year to 29,600 machines, contributing 19% of total sales.
  • Leadership Transition:: Erik Gershwind steps down as CEO after 1.5 decades; Martina McIsaac succeeds him with 2026 guidance of 3.5–4.5% sales growth and 8.0–8.6% adjusted margin.

Revenue Growth Drivers

The company's core customer average daily sales growth rate turned positive, driven by several initiatives, including realigning public-facing web pricing, upgrading e-commerce experience, accelerating marketing efforts, and optimizing seller coverage. The public sector continued its strong trend in the quarter, with daily sales growth of 8.5% year-over-year. As Martina McIsaac noted during the Q&A session, "We're encouraged by our daily sales trend that continues to improve across all customer types."

Margin Performance

Gross margin benefited from price realization, contributing 170 basis points to growth year-over-year. The company's adjusted operating margin declined 230 basis points compared to the prior year. MSC expects gross margin to improve from 4Q levels to 40.7%, plus or minus 20 basis points, in FY2026.

Valuation Metrics

With a P/E Ratio of 24.61 and an EV/EBITDA of 15.05, the market appears to be pricing in moderate growth expectations. The company's ROE of 14.53% and ROIC of 10.93% indicate a strong ability to generate returns on equity and invested capital. The Dividend Yield of 3.86% provides a relatively attractive income stream.

Outlook and Guidance

MSC expects average daily sales growth of 3.5% to 4.5% year-over-year in FY2026, with adjusted operating margin falling within the range of 8.0% to 8.6%. The company anticipates an increase in adjusted operating expenses compared to the fiscal fourth quarter of approximately $7 million to $10 million. Analysts estimate next year's revenue growth at 5.5%, which appears achievable given the company's recent performance and guidance.

3. NewsRoom

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MSC Industrial Direct Company, Inc. $MSM Shares Acquired by Advisors Asset Management Inc.

Nov -26

Source: defenseworld.net

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Commonwealth of Pennsylvania Public School Empls Retrmt SYS Purchases 771 Shares of MSC Industrial Direct Company, Inc. $MSM

Nov -24

Source: defenseworld.net

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MSM Director Buys 6,666 Shares. Is That a Good Sign for Manufacturing?

Nov -22

Source: fool.com

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Metalsource Mining Commences Geophysical Survey Program at North Carolina Projects

Nov -20

Source: newsfilecorp.com

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MSC Industrial Direct Co., Inc. (MSM) Presents at Stephens Annual Investment Conference 2025 Transcript

Nov -19

Source: seekingalpha.com

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MSC Industrial Direct Co., Inc. (MSM) Presents at Baird 55th Annual Global Industrial Conference Transcript

Nov -11

Source: seekingalpha.com

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MSC Industrial Direct Company, Inc. $MSM Shares Sold by Bank of New York Mellon Corp

Nov -11

Source: defenseworld.net

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MSC Industrial Supply Co. to Participate at Upcoming Investor Conferences

Nov -06

Source: accessnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.68%)

6. Segments

Manufacturing Heavy

Expected Growth: 2.0%

MSC Industrial Direct Co., Inc.'s Manufacturing Heavy segment growth of 2.0% is driven by increasing demand for industrial equipment and machinery, growth in e-commerce and digital platforms, and strategic acquisitions. Additionally, the company's focus on cost savings initiatives, operational efficiency, and investments in supply chain optimization are contributing to its growth.

Manufacturing Light

Expected Growth: 1.5%

MSC Industrial Direct Co.'s 1.5% growth in Manufacturing Light is driven by increasing demand for energy-efficient solutions, rising adoption of automation and robotics, and growing need for customized lighting solutions in industries such as automotive and aerospace. Additionally, the company's strategic acquisitions and investments in digitalization are expected to further boost growth.

Other

Expected Growth: 0.8%

MSC Industrial Direct Co., Inc.'s 0.8 growth is driven by increasing demand for industrial supplies, expansion into e-commerce, and strategic acquisitions. Additionally, the company's focus on cost savings initiatives, investments in digital capabilities, and a strong balance sheet contribute to its growth momentum.

Public Sector

Expected Growth: 1.2%

The 1.2% growth in the Public Sector segment of MSC Industrial Direct Co., Inc. is driven by increased government spending on infrastructure projects, a rise in demand for maintenance, repair, and operations (MRO) products, and the company's strategic efforts to expand its presence in the government sector through targeted marketing and sales initiatives.

Retail/Wholesale

Expected Growth: 1.8%

MSC Industrial Direct Co., Inc.'s Retail/Wholesale segment growth of 1.8% is driven by increasing demand for maintenance, repair, and operations (MRO) products, expansion of e-commerce platforms, and strategic acquisitions. Additionally, the company's focus on vending and inventory management solutions, as well as its efforts to improve operational efficiency, contribute to the segment's growth.

Commercial Services

Expected Growth: 2.2%

MSC Industrial Direct Co.'s Commercial Services segment growth of 2.2% is driven by increasing demand for maintenance, repair, and operations (MRO) products from industrial customers, expansion of e-commerce capabilities, and strategic pricing initiatives. Additionally, the company's focus on supply chain optimization and inventory management has improved operational efficiency, contributing to the segment's growth.

7. Detailed Products

Metalworking

MSC Industrial Direct Co., Inc. offers a wide range of metalworking products, including cutting tools, abrasives, and coolants, designed to improve productivity and efficiency in metal fabrication and machining operations.

Maintenance, Repair, and Operations (MRO)

MSC Industrial Direct Co., Inc. provides a broad range of MRO products, including fasteners, adhesives, and lubricants, designed to support maintenance, repair, and operational activities in various industries.

Safety and Janitorial

MSC Industrial Direct Co., Inc. offers a variety of safety and janitorial products, including personal protective equipment, cleaning supplies, and waste management solutions, designed to promote a safe and healthy work environment.

Material Handling and Packaging

MSC Industrial Direct Co., Inc. provides a range of material handling and packaging products, including conveyor systems, pallets, and packaging materials, designed to improve efficiency and productivity in warehousing and logistics operations.

Janitorial and Sanitation

MSC Industrial Direct Co., Inc. offers a variety of janitorial and sanitation products, including cleaning supplies, paper products, and waste management solutions, designed to maintain cleanliness and hygiene in various settings.

Fluid Management

MSC Industrial Direct Co., Inc. provides a range of fluid management products, including pumps, valves, and hoses, designed to support fluid handling and transfer operations in various industries.

8. MSC Industrial Direct Co., Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for MSC Industrial Direct Co., Inc. is medium due to the availability of alternative products and services from competitors.

Bargaining Power Of Customers

The bargaining power of customers for MSC Industrial Direct Co., Inc. is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for MSC Industrial Direct Co., Inc. is medium due to the company's dependence on a few large suppliers.

Threat Of New Entrants

The threat of new entrants for MSC Industrial Direct Co., Inc. is low due to the high barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry for MSC Industrial Direct Co., Inc. is high due to the competitive nature of the industry and the presence of several large competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.06%
Debt Cost 5.75%
Equity Weight 73.94%
Equity Cost 8.47%
WACC 7.76%
Leverage 35.25%

11. Quality Control: MSC Industrial Direct Co., Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
MSC Industrial Direct Co

A-Score: 6.1/10

Value: 4.2

Growth: 3.7

Quality: 6.0

Yield: 8.0

Momentum: 6.5

Volatility: 8.3

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Applied Industrial Technologies

A-Score: 5.7/10

Value: 3.2

Growth: 7.1

Quality: 7.2

Yield: 2.0

Momentum: 7.0

Volatility: 7.7

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Watsco

A-Score: 5.4/10

Value: 3.0

Growth: 6.9

Quality: 7.2

Yield: 6.0

Momentum: 2.0

Volatility: 7.3

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WESCO

A-Score: 5.2/10

Value: 4.5

Growth: 7.9

Quality: 5.6

Yield: 1.0

Momentum: 7.5

Volatility: 5.0

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Core & Main

A-Score: 5.0/10

Value: 4.0

Growth: 8.4

Quality: 5.4

Yield: 0.0

Momentum: 7.0

Volatility: 5.0

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Pool

A-Score: 4.8/10

Value: 2.8

Growth: 6.9

Quality: 5.9

Yield: 3.0

Momentum: 3.0

Volatility: 7.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

82.9$

Current Price

82.9$

Potential

-0.00%

Expected Cash-Flows