As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at maintenance and repair distributors stocks, starting with MSC Industrial (NYSE:MSM).
Supply chain and inventory management are themes that grew in focus after COVID wreaked havoc on the global movement of raw materials and components. Maintenance and repair distributors that boast reliable selection and quickly deliver products to customers can benefit from this theme. While e-commerce hasn’t disrupted industrial distribution as much as consumer retail, it is still a real threat, forcing investment in omnichannel capabilities to serve customers everywhere. Additionally, maintenance and repair distributors are at the whim of economic cycles that impact the capital spending and construction projects that can juice demand.
The 8 maintenance and repair distributors stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
In light of this news, maintenance and repair distributors stocks have held steady with share prices up 4.2% on average since the latest earnings results.
MSC Industrial (NYSE:MSM)
Founded in NYC’s Little Italy, MSC Industrial Direct (NYSE:MSM) provides industrial supplies and equipment, offering vast and reliable selection for customers such as contractors
MSC Industrial reported revenues of $979.4 million, down 7.1% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a narrow beat of analysts’ operating margin estimates.
Erik Gershwind, President and Chief Executive Officer, said, "As announced on June 13th, we began the second half of our fiscal year with unexpected gross margin pressure and a slower than expected recovery in average daily sales, particularly within our Core customer base. As a result, our third quarter performance was below expectations and led to a revised full year outlook. We responded with swift corrective actions to improve gross margin trending and accelerate progress on the rollout of our web enhancements."
MSC Industrial delivered the slowest revenue growth of the whole group. Interestingly, the stock is up 10.3% since reporting and currently trades at $86.26.
Is now the time to buy MSC Industrial? Access our full analysis of the earnings results here, it’s free.
Best Q2: DXP (NASDAQ:DXPE)
Founded during the emergence of Big Oil in Texas, DXP (NASDAQ:DXPE) provides pumps, valves, and other industrial components.
DXP reported revenues of $445.6 million, up 4.1% year on year, outperforming analysts’ expectations by 2.7%. The business had a stunning quarter with an impressive beat of analysts’ earnings estimates.
DXP scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 7.6% since reporting. It currently trades at $51.39.
Is now the time to buy DXP? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: WESCO (NYSE:WCC)
Based in Pittsburgh, WESCO (NYSE:WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.
WESCO reported revenues of $5.48 billion, down 4.6% year on year, falling short of analysts’ expectations by 1.5%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
As expected, the stock is down 1.6% since the results and currently trades at $172.11.
Read our full analysis of WESCO’s results here.
Fastenal (NASDAQ:FAST)
Founded in 1967, Fastenal (NASDAQ:FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally.
Fastenal reported revenues of $1.92 billion, up 1.8% year on year. This number was in line with analysts’ expectations. Zooming out, it was a mixed quarter as it also logged a narrow beat of analysts’ earnings estimates but a miss of analysts’ operating margin estimates.
The stock is up 11.7% since reporting and currently trades at $71.65.
Read our full, actionable report on Fastenal here, it’s free.
Distribution Solutions (NASDAQ:DSGR)
Founded in 1952, Distribution Solutions (NASDAQ:DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries.
Distribution Solutions reported revenues of $439.5 million, up 16.3% year on year. This print met analysts’ expectations. Zooming out, it was a mixed quarter as it produced a miss of analysts’ earnings estimates.
Distribution Solutions pulled off the fastest revenue growth among its peers. The stock is up 11.8% since reporting and currently trades at $37.49.
Read our full, actionable report on Distribution Solutions here, it’s free.
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