What Are Analysts Saying About MSC Industrial Direct Co Inc’s (NYSE:MSM) Future?
MSC Industrial Direct Co Inc’s (NYSE:MSM) released its most recent earnings update in September 2018, which indicated that the company experienced a strong tailwind, leading to a double-digit earnings growth of 42%. Below is a brief commentary on my key takeaways on how market analysts view MSC Industrial Direct’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
View our latest analysis for MSC Industrial Direct
Analysts’ outlook for the upcoming year seems pessimistic, with earnings decreasing by -0.05%. But in the following year, there is a complete contrast in performance, with generating double digit 9.2% compared to today’s level and continues to increase to US$390m in 2021.
Even though it’s informative understanding the rate of growth each year relative to today’s value, it may be more insightful estimating the rate at which the business is rising or falling every year, on average. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of MSC Industrial Direct’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 7.2%. This means, we can assume MSC Industrial Direct will grow its earnings by 7.2% every year for the next couple of years.
Next Steps:
For MSC Industrial Direct, I’ve put together three relevant aspects you should further examine:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is MSM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MSM is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MSM? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
