MSC Industrial Direct Co., Inc. (NYSE:MSM), which is in the trade distributors business, and is based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine MSC Industrial Direct’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What’s the opportunity in MSC Industrial Direct?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.51% above my intrinsic value, which means if you buy MSC Industrial Direct today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $80.08, there’s only an insignificant downside when the price falls to its real value. Furthermore, MSC Industrial Direct’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from MSC Industrial Direct?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by a double-digit 14% over the next couple of years, the outlook is positive for MSC Industrial Direct. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? MSM’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on MSM, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on MSC Industrial Direct. You can find everything you need to know about MSC Industrial Direct in the latest infographic research report. If you are no longer interested in MSC Industrial Direct, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.