MSM - MSC Industrial Feeling Some Friction From Weakness Among Smaller Manufacturers
2024-04-08 21:33:27 ET
Summary
- MSC Industrial's share price performance has been lackluster due to ongoing challenges in short-cycle manufacturing, particularly among smaller manufacturers.
- The company's reliance on manufacturing, especially smaller manufacturers, has contributed to its underperformance compared to other distributors like Fastenal and Grainger.
- Margins are holding up well, and the company continues to invest in differentiating opportunities like vending, on-site, and service.
- While there are concerns about a potential harder landing for the economy, MSC is well-positioned to benefit from growth in U.S. manufacturing. However, the shares are not an obvious bargain.
When I last wrote about MSC Industrial (MSM) in the fall of 2023, my view on the company was balanced between commendable ongoing execution and my worse-than-consensus expectations for short-cycle manufacturing, and particularly among smaller manufacturers. Both of those drivers have continued to play out, leading to a lackluster share price performance since my last update, a couple of modest misses versus Street expectations, and lower sell-side estimate for the remainder of the year....
MSC Industrial Feeling Some Friction From Weakness Among Smaller Manufacturers