MRC Global Retains Scopes for Growth Amid Energy Market Woes

On Apr 7, we issued an updated research report on MRC Global Inc.MRC .

Over the last seven days, the Zacks Consensus Estimate for this Zacks Rank #3 (Hold) stock remained unchanged for both 2017 and 2018, reflecting neutral market sentiments.

Inside Story

Over the last one year, MRC Global's shares yielded a return of 43.63%, outperforming 30.22% growth recorded by the Zacks categorized Steel-Pipe & Tube industry. Notably, the stock's projected earnings growth rate this year is 111.80%, way higher than the Steel-Pipe & Tube industry's projected growth rate of 4.60%.

MRC Global intends to boost its competency on the back of acquisitions and restructuring activities. It is aimed at reinforcing its presence on the North American platform and focus on certain areas of business, including downstream, alloys & valves and MRO (maintenance, repair, and operations), with strategic buyouts.

Notably, in Aug 2016, the company rolled out a plan under which it has been downsizing and restructuring its operations in Australia. This diligent move has been made to counter the persistent downturn lingering in the mining and energy industries in the region. The plan is estimated to be accomplished by the end of first-quarter 2017 and will likely give rise to some productive resources which can be deployed in areas offering immense growth in business.

The company intends to bolster its revenues on the back of strategic organic deals. For instance, the new five-year PVF deal secured from PBF Energy Inc. PBF (Apr 2017) and the Enterprise Distributor Program (EDP) agreement inked with Cameron International (Oct 2016) are expected to boost the company's multi-year growth strategy. In 2014, MRC Global had implemented this strategy to re-balance product lines, streamline selling, general & administrative costs, drive worldwide industrial valve sales and expand business internationally.

MRC Global is also committed toward its shareholders, and tries to provide greater value to them through lucrative dividend and share buyback offers.

However, we believe that the benefits generated by the above mentioned aspects might be offset due to certain headwinds prevailing in the industry.

MRC Global reported weaker-than-expected fourth-quarter 2016 results. The downside was stemmed by weak energy market pricing conditions. Organization of the Petroleum Exporting Countries' (OPEC) decision to backtrack oil prices has been more than offset by record crude inventories and stock in the U.S. Nevertheless, lower oil prices have been weighing over the investments made by the energy companies, in turn, hurting MRC Global's upstream, midstream and downstream businesses. Further slump in oil prices might weaken MRC Global's top- and bottom-line performance in the quarters ahead.

Also, headwinds like stiff industry rivalry or input price inflation (such as rise in price of steel) are likely to limit near-term growth.

Stocks to Consider

Better-ranked stocks within the industry are listed below:

ACCO Brands Corporation ACCO has an average earnings surprise of 24.74% for the last four quarters and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Altra Industrial Motion Corp. AIMC holds a Zacks Rank #2 (Buy) and has an average earnings surprise of 12.49% for the trailing four quarters.

Zacks' Best Private Investment Ideas

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.

Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>

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

Altra Industrial Motion Corp. (AIMC): Free Stock Analysis Report

Acco Brands Corporation (ACCO): Free Stock Analysis Report

PBF Energy Inc. (PBF): Free Stock Analysis Report

MRC Global Inc. (MRC): 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