MS

MSC Industrial Direct Co Inc

MSM
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MSC Industrial Direct Co Inc AI Insights

Informational only. Not investment advice.
As of 2026-01-05

Snapshot

  • Goodwill of 724M is 52% of equity (1.4B TTM) - acquisition-heavy model with impairment risk if industrial demand weakens.[Goodwill]
  • EPS declined -15.6% 3Y CAGR while paying out 91% of earnings as dividends ($3.40 vs $3.72 EPS TTM) - unsustainable payout.[EPS Growth 3 Year]
  • Operating margin 8.3% TTM is 2.7x industry median (3.1%) but asset turnover 1.53x signals working capital drag from 644M inventory.[Operating Margin]

Watch Triggers

  • Dividend Payout Ratio: Exceeds 100% for 2 consecutive quarters — Would signal dividend cut imminent - stock likely reprices 15-20% lower on announcement.
  • Inventory: Exceeds 18% of TTM revenue — Rising inventory signals demand weakness; write-downs would compress already declining EPS.
  • Operating Margin: Falls below 7% — Would eliminate margin advantage vs peers and pressure FCF coverage of dividend.

Bull Case

FCF yield of 5.0% (241M FCF / 4.8B market cap TTM) with 0.39 debt/equity provides cushion for capital returns despite earnings pressure.

Free Cash FlowDebt to EquityMarket Cap

ROIC of 10.3% TTM is 3x industry median (3.3%), demonstrating durable competitive positioning in MRO distribution.

ROICOperating Margin

Bear Case

EPS contracting -15.6% 3Y CAGR with negative 5Y growth (-0.4%) signals structural demand or margin headwinds, not cyclical.

EPS Growth 3 YearEPS Growth 5 Year

Inventory of 644M (17% of revenue TTM) vs 225M payables creates 419M working capital burden limiting FCF conversion.

InventoryAccounts PayableWorking Capital

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
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Forward Thesis

Dividend at risk of cut within 12-18 months if EPS erosion continues at current trajectory.

1-3ymed
  • Payout ratio 91% TTM exceeds 5Y avg of 66%
  • EPS declining -15.6% 3Y CAGR
  • FCF of 241M barely covers 190M dividend obligation
Dividends Paid Per Share TTM: $3.40 vs EPS $3.72Free Cash Flow TTM: 241MEPS Growth 3 Year: -15.6%
Valuation Context
Caveats

Public Strategies Rankings

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Fundamental company data provided by Morningstar, updated daily.

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