Global Industrial (GIC)

Industrial and commercial distributor Global Industrial (NYSE:GIC) fell short of the market’s revenue expectations in Q3 CY2025 as sales rose 3.3% year on year to $353.6 million. Its GAAP profit of $0.48 per share was 14.3% below analysts’ consensus estimates.

Company Overview

Formerly known as Systemax, Global Industrial (NYSE:GIC) distributes industrial and commercial products to businesses and institutions.

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.

Competitors in the industrial and commercial products industry include Grainger (NYSE:GWW), Fastenal (NASDAQ:FAST), and MSC Industrial (NYSE:MSM

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Global Industrial’s sales grew at a mediocre 6.5% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Global Industrial’s recent performance shows its demand has slowed as its annualized revenue growth of 4.9% over the last two years was below its five-year trend.

This quarter, Global Industrial’s revenue grew by 3.3% year on year to $353.6 million, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 5.8% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and suggests its newer products and services will not lead to better top-line performance yet.

For industrials businesses, cost of sales is usually comprised of the direct labor, raw materials, and supplies needed to offer a product or service. These costs can be impacted by inflation and supply chain dynamics in the short term and a company’s purchasing power and scale over the long term.

Global Industrial’s gross margin is good compared to other industrials businesses and signals it sells differentiated products, not commodities. As you can see below, it averaged an impressive 35.1% gross margin over the last five years. Said differently, Global Industrial paid its suppliers $64.95 for every $100 in revenue.

In Q3, Global Industrial produced a 35.6% gross profit margin, marking a 1.7 percentage point increase from 34% in the same quarter last year. Global Industrial’s full-year margin has also been trending up over the past 12 months, increasing by 1.1 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

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.

Global Industrial’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 7.7% over the last five years. This profitability was mediocre for an industrials business and caused by its suboptimal cost structure.

Looking at the trend in its profitability, Global Industrial’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Global Industrial generated an operating margin profit margin of 7.4%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

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.

Global Industrial’s EPS grew at a weak 1.9% compounded annual growth rate over the last five years, lower than its 6.5% annualized revenue growth. However, its operating margin didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

Diving into the nuances of Global Industrial’s earnings can give us a better understanding of its performance. A five-year view shows Global Industrial has diluted its shareholders, growing its share count by 2.4%. This has led to lower per share earnings. Taxes and interest expenses 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 Global Industrial, its two-year annual EPS declines of 1.7% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Global Industrial reported EPS of $0.48, up from $0.44 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Global Industrial’s full-year EPS of $1.75 to grow 16.6%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Global Industrial has shown mediocre cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 5.2%, subpar for an industrials business.

Taking a step back, we can see that Global Industrial’s margin dropped by 1.4 percentage points during that time. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. Almost any movement in the wrong direction is undesirable because of its relatively low cash conversion. If the longer-term trend returns, it could signal it’s in the middle of an investment cycle.

Global Industrial’s free cash flow clocked in at $22 million in Q3, equivalent to a 6.2% margin. This result was good as its margin was 3.7 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends trump fluctuations.

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 Global Industrial hasn’t been the highest-quality company lately because of its poor bottom-line (EPS) performance, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 37.5%, splendid for an industrials 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. Unfortunately, Global Industrial’s ROIC has decreased significantly 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.

Global Industrial reported $67.2 million of cash and $115 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 $102.8 million of EBITDA over the last 12 months, we view Global Industrial’s 0.5× net-debt-to-EBITDA ratio as safe. We also see its $500,000 of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We enjoyed seeing Global Industrial beat analysts’ EBITDA expectations this quarter. On the other hand, its revenue and EPS fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 14.6% to $30 immediately following the results.

Updated: December 3, 2025 at 10:50 PM EST

Before deciding whether to buy Global Industrial or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

We see the value of companies helping their customers, but in the case of Global Industrial, we’re out. To begin with, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its stellar ROIC suggests it has been a well-run company historically, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its low free cash flow margins give it little breathing room.

Global Industrial’s P/E ratio based on the next 12 months is 14.8x. While this valuation is reasonable, we don’t see a big opportunity at the moment. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $38 on the company (compared to the current share price of $28.67).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.