MSA Safety (MSA)

Safety equipment manufacturer MSA Safety (NYSE:MSA) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 8.3% year on year to $468.4 million. Its non-GAAP profit of $1.94 per share was 3.9% above analysts’ consensus estimates.

Company Overview

Founded in 1914 as Mine Safety Appliances to protect coal miners from dangerous gases, MSA Safety (NYSE:MSA) designs and manufactures advanced safety products that protect workers and facilities across industries including fire service, energy, construction, and manufacturing.

Rising concerns over physical security, cybersecurity threats, and workplace safety regulations will present opportunities for companies in this sector. AI and digitization will enhance surveillance, access control, and threat detection, which could benefit key players in Safety & Security Services. These trends could also introduce ethical and regulatory concerns over data privacy and automated decision-making in security operations, giving rise to headline risks. Finally, increasing scrutiny on private security practices and evolving criminal justice policies again mean that companies in the space need to operate with the utmost care or risk being the poster child of abuse of power.

MSA Safety's competitors include 3M (NYSE:MMM) in respiratory and head protection, Honeywell (NASDAQ:HON) in gas detection and protective equipment, and Dräger (ETR:DRW3) in breathing apparatus and gas detection systems. In the fire service market, they compete with Globe Manufacturing (owned by MSA) and Lion Group.

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.

With $1.86 billion in revenue over the past 12 months, MSA Safety is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, MSA Safety’s sales grew at a decent 6.9% compounded annual growth rate over the last five years. This shows its offerings generated slightly more demand than the average business services company, a useful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. MSA Safety’s recent performance shows its demand has slowed as its annualized revenue growth of 3.6% over the last two years was below its five-year trend.

This quarter, MSA Safety reported year-on-year revenue growth of 8.3%, and its $468.4 million of revenue exceeded Wall Street’s estimates by 1.1%.

Looking ahead, sell-side analysts expect revenue to grow 4.9% over the next 12 months, similar to its two-year rate. Although this projection suggests its newer products and services will catalyze better top-line performance, it is still below the sector average.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

MSA Safety has been a well-oiled machine over the last five years. It demonstrated elite profitability for a business services business, boasting an average operating margin of 21%.

Analyzing the trend in its profitability, MSA Safety’s operating margin rose by 5.5 percentage points over the last five years, as its sales growth gave it immense operating leverage.

This quarter, MSA Safety generated an operating margin profit margin of 20.1%, down 2.9 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

MSA Safety’s EPS grew at a remarkable 11.5% compounded annual growth rate over the last five years, higher than its 6.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into MSA Safety’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, MSA Safety’s operating margin declined this quarter but expanded by 5.5 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For MSA Safety, its two-year annual EPS growth of 7.3% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, MSA Safety reported adjusted EPS of $1.94, up from $1.83 in the same quarter last year. This print beat analysts’ estimates by 3.9%. Over the next 12 months, Wall Street expects MSA Safety’s full-year EPS of $7.80 to grow 11.4%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

MSA Safety has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 14.2% over the last five years.

Taking a step back, we can see that MSA Safety’s margin expanded by 2.2 percentage points during that time. This is encouraging because it gives the company more optionality.

MSA Safety’s free cash flow clocked in at $100.5 million in Q3, equivalent to a 21.5% margin. This result was good as its margin was 5.3 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although MSA Safety hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked out well. Its five-year average ROIC was 20.6%, impressive for a business services business.

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. Uneventfully, MSA Safety’s ROIC has stayed the same over the last few years. Given the company’s underwhelming financial performance in other areas, we’d like to see its returns improve before recommending the stock.

MSA Safety reported $170 million of cash and $628.6 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $471.6 million of EBITDA over the last 12 months, we view MSA Safety’s 1.0× net-debt-to-EBITDA ratio as safe. We also see its $6.85 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see MSA Safety beat analysts’ EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. The market seemed to be hoping for more, and the stock traded down 1.6% to $160 immediately following the results.

Updated: December 4, 2025 at 10:18 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in MSA Safety.

MSA Safety has a few positive attributes, but it doesn’t top our wishlist. First off, its revenue growth was good over the last five years. On top of that, MSA Safety’s impressive operating margins show it has a highly efficient business model, and its powerful free cash flow generation enables it to stay ahead of the competition through consistent reinvestment of profits.

MSA Safety’s P/E ratio based on the next 12 months is 19.3x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $189.50 on the company (compared to the current share price of $163.19).