MSC Industrial Direct (NYSE: MSM) is one of 18 publicly-traded companies in the “Industrial Machinery” industry, but how does it weigh in compared to its peers? We will compare MSC Industrial Direct to similar businesses based on the strength of its valuation, profitability, analyst recommendations, risk, earnings, dividends and institutional ownership.

Valuation and Earnings

This table compares MSC Industrial Direct and its peers top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
MSC Industrial Direct $2.88 billion $443.59 million 18.69
MSC Industrial Direct Competitors $696.10 million $107.92 million 49.52

MSC Industrial Direct has higher revenue and earnings than its peers. MSC Industrial Direct is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Dividends

MSC Industrial Direct pays an annual dividend of $1.80 per share and has a dividend yield of 2.4%. MSC Industrial Direct pays out 45.1% of its earnings in the form of a dividend. As a group, “Industrial Machinery” companies pay a dividend yield of 1.1% and pay out 34.1% of their earnings in the form of a dividend. MSC Industrial Direct has increased its dividend for 6 consecutive years.

Institutional & Insider Ownership

75.6% of MSC Industrial Direct shares are owned by institutional investors. Comparatively, 63.5% of shares of all “Industrial Machinery” companies are owned by institutional investors. 31.3% of MSC Industrial Direct shares are owned by insiders. Comparatively, 12.0% of shares of all “Industrial Machinery” companies are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares MSC Industrial Direct and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MSC Industrial Direct 8.07% 20.05% 11.38%
MSC Industrial Direct Competitors -24.03% 10.43% 4.25%

Analyst Ratings

This is a summary of current ratings and target prices for MSC Industrial Direct and its peers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MSC Industrial Direct 1 10 4 0 2.20
MSC Industrial Direct Competitors 44 290 285 7 2.41

MSC Industrial Direct presently has a consensus target price of $89.92, indicating a potential upside of 20.56%. As a group, “Industrial Machinery” companies have a potential upside of 5.73%. Given MSC Industrial Direct’s higher probable upside, analysts clearly believe MSC Industrial Direct is more favorable than its peers.

Volatility and Risk

MSC Industrial Direct has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500. Comparatively, MSC Industrial Direct’s peers have a beta of 1.52, suggesting that their average share price is 52% more volatile than the S&P 500.

Summary

MSC Industrial Direct beats its peers on 9 of the 15 factors compared.

MSC Industrial Direct Company Profile

MSC Industrial Direct Co., Inc. is a North American distributor of metalworking and maintenance, repair and operations (MRO) products and services. The Company’s range of MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock, 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 serves a range of customers throughout the United States, Canada and the United Kingdom, from individual machine shops, to manufacturing companies, to government agencies, such as the General Services Administration and the Department of Defense. The Company also serves durable and non-durable goods manufacturing, education and healthcare markets, among others. As of September 3, 2016, the Company had operated a network of 12 customer fulfillment centers.

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