MSM
MSC Industrial Direct Co., Inc.
$106.50
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 34.9% above fair value
You pay
$106.50
Bear
$63.15
Fair
$78.93
Bull
$94.72
Bear
$63.15
-40.7%
$4.84 × 12x P/E
Fair
$78.93
-25.9%
$4.84 × 15x P/E
Bull
$94.72
-11.1%
$4.84 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
22.0x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $97.75 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $78.93 per share.
Warnings
The company's reported profits differ from official accounting profits by 36%. Check what costs are being left out of the adjusted number.
The company pays out 97% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $97.75 (from 28 analysts). Our estimate is 26% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples