Examining MSC Industrial Direct Co., Inc.'s (NYSE:MSM) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess MSM's latest performance announced on 31 August 2019 and weigh these figures against its longer term trend and industry movements.
How Did MSM's Recent Performance Stack Up Against Its Past?
MSM's trailing twelve-month earnings (from 31 August 2019) of US$289m has declined by -12% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 7.5%, indicating the rate at which MSM is growing has slowed down. Why is this? Well, let’s take a look at what’s going on with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, MSC Industrial Direct has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 13% exceeds the US Trade Distributors industry of 6.4%, indicating MSC Industrial Direct has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for MSC Industrial Direct’s debt level, has declined over the past 3 years from 24% to 23%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 22% to 30% over the past 5 years.
What does this mean?
MSC Industrial Direct's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I recommend you continue to research MSC Industrial Direct to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MSM’s future growth? Take a look at our free research report of analyst consensus for MSM’s outlook.
- Financial Health: Are MSM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 August 2019. This may not be consistent with full year annual report figures.
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 firstname.lastname@example.org. 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.