MRC Global (MRC) Gains From Business Strength Amid Risks
MRC Global Inc.’s MRC diversified presence across several end markets, including upstream production, midstream pipelines, gas utilities, downstream, industrial and energy transition, enables it to tap opportunities and neutralize operating risks associated with a single market. The company’s focus on customer service, supported by new product introduction, strong operational execution and supply-chain management, bode well.
The firm has combined its Upstream Production and Midstream Pipeline into one sector — the PTI sector. Increased customer infrastructure activity in the Permian basin and the Rockies augur well for the company’s PTI sector. MRC expects PTI revenues to increase in the upper-single-digit percentage range in 2023. In the same year, its total revenues are anticipated to grow in the low-single-digit percentage year over year.
MRC Global has been committed to rewarding shareholders through dividend payouts. For instance, in the first nine months of 2023 and 2022, it paid out dividends worth $18 million and $24 million, respectively to shareholders. The reduction of debts remains a priority for the company. In the first nine months of 2023, it repaid $776 million in borrowings under revolving credit facilities.
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In the past three months, the Zacks Rank #3 (Hold) company has gained 12.1% compared with the industry’s growth of 7.6%.
However, decreased customer spending for modernization and replacement activity and delayed customer projects have been affecting the Gas Utilities sector. Also, the company has been grappling with escalating operating costs and expenses over time. In the first nine months of 2023, its cost of sales increased 3.2% year over year, while selling, general and administrative expenses climbed 8.9% due to higher employee-related costs and associated benefit costs.
MRC’s extensive presence across international markets exposes it to risks from negative foreign currency translations. In third-quarter 2023, foreign exchange headwinds adversely impacted International sales by $3 million or 3% year over year.
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We have highlighted three better-ranked stocks, namely Alarm.com ALRM, Lakeland Industries LAKE and Resideo Technologies REZI each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alarm.com delivered a trailing four-quarter average earnings surprise of 35%. In the past 60 days, the Zacks Consensus Estimate for ALRM’s 2023 earnings has increased 12.4%. The stock has risen 2.5% in the past three months.
Lakeland Industries has a trailing four-quarter average earnings surprise of 38.4%. The consensus estimate for LAKE’s 2023 earnings has increased 8.6% in the past 60 days. Shares of the company have rallied 21.4% in the past three months.
Resideo Technologies delivered a trailing four-quarter average earnings surprise of 5.7%. In the past 60 days, the consensus estimate for REZI’s 2023 earnings has improved by 18.4%. The stock has risen 17.3% in the past six months.
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