MSC Industrial Direct Co., Inc. (MSM) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: MSC Industrial Direct Co., Inc.

Updated on October 23, 2026 · accounts published on October 22, 2026

Reading of October 22, 2026: A consistently profitable business whose margins have thinned to a decade low

MSC Industrial Direct trades at a P/E of 27.2 over the last 12 months, 46 % above its ten-year median of 18.6.

• Is MSC Industrial Direct expensive or cheap? At a P/E of 27.2, it trades 46 % above its ten-year median and has traded lower 94 % of the time in the decade.
• How is the business doing? Operating margin is 8.0 % in fiscal 2026, the lowest in 12 fiscal years and below the 11.6 % average since 2015.
• How strong is the balance sheet? Net debt is 1.1× EBITDA in fiscal 2026, and the 3.1 % dividend has risen for four years, with an 87 % payout.
• Does it turn margin into cash, and at what multiple of the cycle does it trade? Free cash flow was 138 % of net income in fiscal 2026, while EV/EBITDA of 16.2× is above its 12.5× seven-year average.
• What to expect from the next earnings? Analysts expect EPS of $1.21 when results come out on January 6, 2027; 10 of 29 analysts rate it a buy.

Is MSC Industrial Direct expensive or cheap?

Over the last 12 months MSC Industrial Direct trades at a P/E of 27.2. Its ten-year median is 18.6, and the decade range runs from 9.2 to 36.5. It has traded at a lower P/E than today 94 % of the time over the last decade. Against its sector the premium is small: the median sector P/E is 26.2, so it sits 4 % above. EV/EBITDA of 16.2× is also above its seven-year average of 12.5×. The stock is up 34 % over 12 months and sits 15 % below its 52-week high of $132.82. The current multiple assumes better earnings than today's margins deliver.

How is the business doing?

Over the last 12 months revenue grew 6.4 % and EPS 11.5 %, so sales are still growing. Profitability is the weak spot: the operating margin of 8.0 % in fiscal 2026 is the lowest of the 12 fiscal years since 2015, against an average of 11.6 %. Net margin is 5.6 % and ROE 15.9 %. Returns on capital hold up better: ROIC of 11.4 % is 2.6 points above the sector median of 8.9 %, and it has stayed above 10 % in each of the last ten fiscal years. Revenue per share grew 4.3 % a year over fiscal 2021-2026, a modest pace.

How strong is the balance sheet?

Debt is not the problem. Debt to equity is 0.37 over the last 12 months, and net debt of $8.69 per share in fiscal 2026 equals 8 % of the share price. The current ratio is 1.78, and the Altman Z of 5.3 sits well inside the safe zone above 2.99. The dividend yields 3.1 % over the last 12 months and has grown for four consecutive fiscal years, but the payout reached 87 % of earnings in fiscal 2026. With margins at a decade low, there is little room for further increases unless profits recover.

Does it turn margin into cash, and at what multiple of the cycle does it trade?

Industrials are semi-cyclical, so a single year's earnings can mislead. That is why operating margin, cash conversion and multiples measured across the cycle matter more here. On cash, MSC Industrial Direct passes clearly: free cash flow equalled 138 % of net income in fiscal 2026, against a healthy threshold of 85 %, and net debt of 1.1× EBITDA is well below the 3× ceiling. It falls short on margin, 8.0 % against the 12 % healthy mark, and on ROIC, 11.4 % against 15 %. Its P/E of 27.2 is well above its ten-year average of 18.7, so the market is paying a peak-cycle multiple for trough-level margins.

What to expect from the next earnings?

On October 22, 2026, MSC Industrial Direct reported EPS of $1.45 against $1.41 expected, a 2.8 % beat, and it has beaten EPS estimates in 7 of the last 8 quarters. Of the 29 analysts covering it, 10 recommend buying, 18 holding and 1 selling. The 2027 EPS consensus rose 1.6 % over the last 30 days, from $5.47 to $5.56 among 7 analysts, while the revenue estimate barely moved. The $1.21 forecast for the next quarter is below the latest $1.45, so the January report will show whether margins are stabilising.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.