Here's Why You Should Buy MSC Industrial (MSM) Stock Now

Market data chart with calculator

We believe that MSC Industrial Direct Co., Inc.MSM is a solid choice for investors seeking exposure to the industrial services space. Strengthening operating conditions in the industry, better pricing environment and acquired assets are advantages for the company. Also, increase in share buyback authorization and the quarterly dividend rate have improved the company's investment appeal.

The stock was upgraded to a Zacks Rank #1 (Strong Buy) on Jan 13. It currently has a market capitalization of approximately $5.4 billion.

MSC Industrial reported better-than-expected earnings in two of the last four quarters, pulling off an average positive earnings surprise of 2.62%. Notably, the company's shares have rallied 25.4% in the last three months, outperforming 17.3% gain of the industry .

Why the Upgrade?

MSC Industrial performed well in first-quarter fiscal 2018 (ended Dec 2, 2017), with earnings per share of $1.05 surpassing the year-ago tally by 9.4%. Revenues grew 12% year over year, including 4% gain derived from acquired assets.

In the quarters ahead, MSC Industrial anticipates gaining from improving pricing environment, better operating conditions in the industry and impact of tax reforms on earnings and its customer base. For the fiscal second quarter, it predicts sales to be in the $761-$775 million range while earnings per share will likely be within $1.93-$2.03. The bottom-line projections include the impact of lower effective tax rate and other adjustments.

In addition, MSC Industrial believes in expanding its businesses geographically and widening its product portfolio through acquisition of meaningful businesses. Notably, the company acquired Iowa-based industrial products distributor - DECO Tool Supply Co. - in 2017. Since then, the DECO assets have helped in strengthening the company's metalworking business as well as providing a wider product portfolio and services to its customers.

Moreover, MSC Industrial's commitment toward rewarding its shareholders handsomely through share buybacks and dividend payments works in its favor. In January 2018, its board of directors approved buyback of 2 million shares, with the total authorization now coming to 2.8 million shares. In the same month, the company gifted its shareholders with 21% hike in its quarterly dividend rate.

In the last seven days, earnings estimates for MSC Industrial have been revised upward by five brokerage firms for both fiscal 2018 (ending August 2018) and fiscal 2019. The Zacks Consensus Estimate stands at $4.80 for fiscal 2018 and $5.51 for fiscal 2019, reflecting increase of 5.3% and 10%, respectively, from their tallies seven days ago.

Also, the company currently has an Earnings ESP of +1.46% for fiscal 2018 and +3.05% for fiscal 2019. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Other Stocks to Consider

Other stocks worth considering in the Zacks Industrial Products sector are H&E Equipment Services, Inc. HEES , Ashtead Group PLC ASHTY and Barnes Group, Inc. B . While H&E Equipment sports a Zacks Rank #1, both Ashtead Group and Barnes Group carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

H&E Equipment pulled off an average positive earnings surprise of 34.66% in the last four quarters. Also, earnings estimates for 2018 were revised upward over the last 60 days.

Ashtead Group delivered a positive earnings surprise of 5.19% in the last quarter. Also, bottom-line expectations for fiscal 2018 and fiscal 2019 improved over the past 60 days.

Barnes Group's financial performance was impressive, with an average positive earnings surprise of 9.02% in the last four quarters. Also, earnings estimates for 2018 were revised upward over the last 60 days.

Wall Street's Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

H&E Equipment Services, Inc. (HEES): Free Stock Analysis Report

Barnes Group, Inc. (B): Free Stock Analysis Report

MSC Industrial Direct Company, Inc. (MSM): Free Stock Analysis Report

Ashtead Group PLC (ASHTY): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

    Learn More