Should Value Investors Buy MSC Industrial (MSM) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
MSC Industrial (MSM) is a stock many investors are watching right now. MSM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 14.59, which compares to its industry's average of 15.16. MSM's Forward P/E has been as high as 18.31 and as low as 9.61, with a median of 14.24, all within the past year.
Investors will also notice that MSM has a PEG ratio of 0.96. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MSM's industry has an average PEG of 1.53 right now. MSM's PEG has been as high as 1.29 and as low as 0.64, with a median of 1, all within the past year.
Investors should also recognize that MSM has a P/B ratio of 2.82. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 5.98. Over the past year, MSM's P/B has been as high as 3.29 and as low as 2.05, with a median of 2.66.
Finally, investors should note that MSM has a P/CF ratio of 10.67. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 14.06. Over the past 52 weeks, MSM's P/CF has been as high as 12.68 and as low as 7.76, with a median of 11.16.
These are only a few of the key metrics included in MSC Industrial's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MSM looks like an impressive value stock at the moment.
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