Why MSC Industrial (MSM) Shares Are Getting Obliterated Today

Adam Hejl /
2024/06/14 10:47 am EDT

What Happened:

Shares of industrial supplies company MSC Industrial Direct (NYSE:MSM) fell 13.8% in the pre-market session after the company provided softer preliminary Q3’2024 results. Q3’24 Net sales is expected to be within $978M-$980M, down 7.3%-7.1% Y/Y and below consensus expectations. As a result, the company lowered FY’2024 guidance and expects yearly ADS (average daily sales) growth of (4.7)% - (4.3)% ( vs. previous expectations of 0% - 5%). Similarly, Adjusted Operating Margin is expected to fall within 10.5% - 10.7% (vs. previous expectations of 12.0% - 12.8%). Management attributed the weak forecast to two factors. 1.) Manufacturing softness and slower-than-anticipated ramp in Core Customers resulted in a lower sequential revenue improvement than anticipated. 2.) Gross margins fell approximately 60 basis points below expectations primarily due to increased product and customer mix headwinds and unexpected dilution from web price realignment.

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What is the market telling us:

MSC Industrial's shares are not very volatile than the market average and over the last year have had no move greater than 5%. Moves this big are very rare for MSC Industrial and that is indicating to us that this news had a significant impact on the market's perception of the business.

MSC Industrial is down 23.1% since the beginning of the year, and at $76.57 per share it is trading 27.1% below its 52-week high of $105.01 from October 2023. Investors who bought $1,000 worth of MSC Industrial's shares 5 years ago would now be looking at an investment worth $1,070.

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