Since September 2025, MSC Industrial has been in a holding pattern, posting a small loss of 3.5% while floating around $87.84.
Is there a buying opportunity in MSC Industrial, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Do We Think MSC Industrial Will Underperform?
We're swiping left on MSC Industrial for now. Here are three reasons why MSM doesn't excite us and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, MSC Industrial grew its sales at a sluggish 3.9% compounded annual growth rate. This was below our standard for the industrials sector.
2. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for MSC Industrial, its EPS declined by 3.3% annually over the last five years while its revenue grew by 3.9%. This tells us the company became less profitable on a per-share basis as it expanded.
3. New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, MSC Industrial’s ROIC decreased by 4.5 percentage points annually each year over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.
Final Judgment
MSC Industrial falls short of our quality standards. That said, the stock currently trades at 20.6× forward P/E (or $87.84 per share). This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere. We’d suggest looking at one of our top software and edge computing picks.
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