1/5/2012 12:26:00 AM
NEWS BRIEFS
MSC Sees “Incredible Land Grab Opportunity”
Buy vs. build strategy paying off
MSC Industrial’s record of profit and growth have caught the attention of investors in recent weeks.
“This industrial supply company has posted excellent growth over the past decade and boasts full-cycle returns that many far larger companies in less cyclical businesses never approach,” writes financial analyst Stephen D. Simpson of Kratisto Investing.
Like many industrial supply companies, MSC’s business model focuses on a particular niche – metalworking in this case, a $12 billion market by the company’s estimate. MSC believes that this segment is about $12 billion in size and nobody seems to dispute that it is the dominant supplier.
Simpson noted that similar to Fastenal and Grainger, MSC has adopted industrial vending machines, and “all three are willing to take a proactive role” in helping customers manage inventory.
“Beyond that, though, Fastenal is clearly focused on blanketing the country with stores, Grainger is looking more at global expansion, and MSC is committed to a store-light model that relies on next-day shipping services,” Simpson wrote.
Acquisitions are a big part of MSC’s growth model.
“MSC has been a serial acquirer for some time and that is not likely to change,” Simpson notes. In fact, in an environment where competition is getting more fierce and access to capital more costly for small players, MSC Industrial arguably will often find it cheaper to buy than build.”
And while MSC stock isn’t cheap, Simpson recommended investing in the company so long as you’re looking to hold the stock for some time.
“Great companies have a knack of surpassing expectations and outperforming over the long haul and they’re not so easy to find that they should be discarded lightly.” Web: mscdirect.com ©2011 GlobalFastenerNews.com
MSC Industrial Direct Co. reported net sales rose 15.4% to $545.7 million in the fiscal 2012 first quarter, which ended November 26, 2011.Operating income increased 25.5% to $96.8 million, or 17.7% of net sales, compared with $77.2 million, or 16.3% of net sales, in the prior year period.
Q1 net income climbed 25.8% to $59.8 million, while diluted earnings per share gained 26.7% to $0.95.
“We continue to execute upon our longer term strategy and expect to capitalize on the incredible land grab opportunity that we continue to see before us,” commented CEO David Sandler.
MSC forecasted net sales of $548 million to $600 million in the second quarter of fiscal 2012.
MSC Industrial’s record of profit and growth have caught the attention of investors in recent weeks.
“This industrial supply company has posted excellent growth over the past decade and boasts full-cycle returns that many far larger companies in less cyclical businesses never approach,” writes financial analyst Stephen D. Simpson of Kratisto Investing.
Like many industrial supply companies, MSC’s business model focuses on a particular niche – metalworking in this case, a $12 billion market by the company’s estimate.
Simpson noted that similar to Fastenal and Grainger, MSC has adopted industrial vending machines, and “all three are willing to take a proactive role” in helping customers manage inventory.
“Beyond that, though, Fastenal is clearly focused on blanketing the country with stores, Grainger is looking more at global expansion, and MSC is committed to a store-light model that relies on next-day shipping services,” Simpson wrote.
Acquisitions are a big part of MSC’s growth model.
“MSC has been a serial acquirer for some time and that is not likely to change,” Simpson notes. “In fact, in an environment where competition is getting more fierce and access to capital more costly for small players, MSC Industrial arguably will often find it cheaper to buy than build.”
And while MSC stock isn’t cheap, Simpson recommended investing in the company so long as you’re looking to hold the stock for some time.
“Great companies have a knack of surpassing expectations and outperforming over the long haul and they’re not so easy to find that they should be discarded lightly.” Web: mscdirect.com ©2011 GlobalFastenerNews.com
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