Financial Review: MSC Industrial Direct (MSM) & Systemax (SYX)
MSC Industrial Direct (NYSE:MSM) and Systemax (NYSE:SYX) are both industrial products companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, dividends, analyst recommendations, institutional ownership, valuation and profitability.
This table compares MSC Industrial Direct and Systemax’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|MSC Industrial Direct||10.28%||21.36%||13.06%|
MSC Industrial Direct pays an annual dividend of $2.52 per share and has a dividend yield of 3.1%. Systemax pays an annual dividend of $0.44 per share and has a dividend yield of 1.7%. MSC Industrial Direct pays out 49.6% of its earnings in the form of a dividend. Systemax pays out 33.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. MSC Industrial Direct has increased its dividend for 7 consecutive years. MSC Industrial Direct is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
MSC Industrial Direct has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500. Comparatively, Systemax has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500.
Institutional and Insider Ownership
75.9% of MSC Industrial Direct shares are owned by institutional investors. Comparatively, 28.4% of Systemax shares are owned by institutional investors. 31.3% of MSC Industrial Direct shares are owned by company insiders. Comparatively, 68.0% of Systemax shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
This is a breakdown of current ratings and price targets for MSC Industrial Direct and Systemax, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|MSC Industrial Direct||0||8||7||0||2.47|
MSC Industrial Direct currently has a consensus target price of $100.23, indicating a potential upside of 21.76%. Systemax has a consensus target price of $45.00, indicating a potential upside of 72.94%. Given Systemax’s stronger consensus rating and higher possible upside, analysts clearly believe Systemax is more favorable than MSC Industrial Direct.
Valuation and Earnings
This table compares MSC Industrial Direct and Systemax’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|MSC Industrial Direct||$3.20 billion||1.43||$329.22 million||$5.08||16.20|
|Systemax||$1.27 billion||0.77||$40.40 million||$1.30||20.02|
MSC Industrial Direct has higher revenue and earnings than Systemax. MSC Industrial Direct is trading at a lower price-to-earnings ratio than Systemax, indicating that it is currently the more affordable of the two stocks.
MSC Industrial Direct beats Systemax on 10 of the 17 factors compared between the two stocks.
MSC Industrial Direct Company Profile
MSC Industrial Direct Co., Inc., together with its subsidiaries, distributes metalworking and maintenance, repair, and operations (MRO) products in the United States, Canada, and the United Kingdom. The company's MRO products comprise cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock products, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components, and electrical supplies. It offers approximately 1,645,000 stock-keeping units through its catalogs; brochures; e-commerce channels, including its Website, mscdirect.com; inventory management solutions; and call-centers and branches. The company serves through its distribution network of 100 branch offices and 12 customer fulfillment centers. It serves individual machine shops, Fortune 100 manufacturing companies, and government agencies. The company was founded in 1941 and is headquartered in Melville, New York.
Systemax Company Profile
Systemax Inc. operates as a direct marketer of brand name and private label products. Its Industrial Products Group segment sells a range of maintenance, repair, and operation products, including storage and shelving, material handling, janitorial and maintenance, furniture and office, HVAC/R and fans, workbench and shop desks, safety and security, outdoor and grounds maintenance, tools and instruments, office and school supplies, plumbing and pumps, packaging and supplies, electrical and lighting, food service and appliances, raw materials and building supplies, motors and power transmission, pneumatics and hydraulics, medical and laboratory equipment, metalworking and cutting tools, vehicle maintenance, and fasteners and hardware in North America. This segment offers its products under the Global, GlobalIndustrial.com, Nexel Relius, Relius Solutions, Paramount, and Interion brand names. The company's Europe Technology Products Group segment sells information and communication technology products, such as servers-storage and backup, desktop computers, laptops, tablets, monitors, and mobile devices; computer parts and memory; computer components and accessories; networking and security; software; and electronics, and commercial and home networking products. This segment also provides TV and video products; audio products; cameras and surveillance products; GPS products; cell phones; video games; and home and electronics accessories. The company offers its products to for-profit businesses, educational organizations, and government entities through its relationship marketers, catalog mailings, and proprietary Internet Websites. Systemax Inc. was founded in 1949 and is headquartered in Port Washington, New York.
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