Pitch: Leader in fragmented industry positioned to continue increasing market share and improve margins. Trades at a steep discount to peers. Distributor servicing maintenance and repair industry in N.A. About 2m SKUs, 80% focused on heavy manufacturing. Closely exposed to the industrial production cycle. Expected to benefit from onshoring and customers’ desire to reduce supply chain risk.
Valuation: MSM trades at 11.5x EBITDA, in line with the historical avg – this valuation fails to reflect re-rating experienced by peers. The closest comparables FAST and GWW trade at 22x and 16x EBITDA respectively. $150/share target at 16x EBITDA.
Exp. gain: +80% to $150/share
Full ZI write-up (free guest account required): https://www.valueinvestorsclub.com/idea/MSC_INDUSTRIAL_DIRECT__-CL_A/8317761548