MSM – Market expectations are for Uniform ROA to decline, but management is confident about their sales, capex investments, and virtual care hubs

May 18, 2021

  • MSC Industrial Direct Co., Inc. (MSM:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 21.6x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, but management is confident about their customer sales growth, capex investment in digital initiatives, and virtual care hub capabilities
  • Specifically, management is confident their history demonstrates the continuous reinvention that allows them to remain relevant in the future, that sales from their core customers improved sequentially, and that their virtual care hubs allowed sales teams to utilize the CRM system and get a 360-degree view of customers. They are also confident they will be able to improve their customers’ outputs, that their capex investments will revolve around digital solutions initiatives, and that their March price increase was a response to inflationary trends