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Since MSC Industrial Direct Co., Inc. (NYSE:MSM) released its earnings in March 2019, it seems that analyst forecasts are fairly conservative, with earnings growth rate expected to be 7.8% next year, which is within range of the past five-year average earnings growth of 7.2%. By 2020, we can expect MSC Industrial Direct’s bottom line to reach US$355m, a jump from the current trailing-twelve-month of US$329m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for MSC Industrial Direct in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from MSC Industrial Direct in the longer term?
Over the next three years, it seems the consensus view of the 16 analysts covering MSM is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of MSM's earnings growth over these next few years.
This results in an annual growth rate of 10% based on the most recent earnings level of US$329m to the final forecast of US$437m by 2022. This leads to an EPS of $7.09 in the final year of projections relative to the current EPS of $5.84. Margins are currently sitting at 10%, which is expected to expand to 12% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For MSC Industrial Direct, there are three fundamental factors you should further research:
- 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 MSC Industrial Direct 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 MSC Industrial Direct is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of MSC Industrial Direct? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.