In This Article:
MSC Industrial Direct Co., Inc. (NYSE:MSM), which is in the trade distributors business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $75.86 at one point, and dropping to the lows of $65.71. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether MSC Industrial Direct's current trading price of $66.3 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at MSC Industrial Direct’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for MSC Industrial Direct
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 8.2% below my intrinsic value, which means if you buy MSC Industrial Direct today, you’d be paying a fair price for it. And if you believe that the stock is really worth $72.2, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, MSC Industrial Direct’s low beta implies that the stock is less volatile than the wider market.
What does the future of MSC Industrial Direct look like?
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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 24% over the next couple of years, the future seems bright 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 conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on MSM, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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.