Pitch:
– Industrial distribution company at a reasonable valuation of 10.5x EBIT guidance for ’22.
– Guidance for 2022 sandbagged.
– Exposure to cyclical recovery in O&G-focused business lines.
– FCF is forecasted to increase 150% by 2024 driven by 10% revenue CAGR and SG&A cost efficiencies.
Valuation:
– Trades at 22% ’24 FCF yield.
– FCF forecasted to improve from $0.9/share in ’22 to $2.35/share in ’24.
– Using 12% FCF yield translates to $19.5 price target.
Exp. gain: +95% to $19.5/share by 2024.
Full MRC write-up (free guest account required): https://www.valueinvestorsclub.com/idea/MRC_GLOBAL_INC/8161601847