MSM: A Very Attractive High-Yield Dividend Growth Stock You’ve Never Heard Of

This FAST Graphs analyze out loud video will cover a mid-cap dividend growth stock that many may not be familiar with. However, I believe this particular dividend growth stock offers an intriguing opportunity of high current yield, above-average growth yield and enticing capital appreciation potential based on its low valuation.

MSC Industrial Direct Co. (MSM)

Company description:

MSC Industrial Supply is one of the nation’s largest direct marketers and distributors of a broad range of metalworking and maintenance, repair and operations (MRO) products to customers throughout North America.

MSC operates a sophisticated network of twelve customer fulfillment centers (eight customer fulfillment centers are located within the United States, three are located in Canada and one is located in the United Kingdom) and 100 branch offices (99 in the United States and one in the U.K.). MSC’s primary customer fulfillment centers are located in or near Harrisburg, Pennsylvania; Atlanta, Georgia; Elkhart, Indiana; Reno, Nevada; and Columbus, Ohio in the United States. In addition, MSC operates 7 smaller customer fulfillment centers in or near Hanover Park, Illinois; Dallas, Texas; Shelbyville, Kentucky (repackaging and replenishment center); Wednesbury, England; Edmonton, Canada; Beamsville, Canada; and Moncton, Canada.

Investment Thesis

MSC Industrial Supply recently missed 3rd quarter earnings estimate by $0.04 as the company earned $1.45 versus $1.49 estimated. Additionally, the revenues came in at $866.55 million which missed by a mere $14.90 M.This is the second quarter in a row that the company has slightly missed estimates. During the 2ndquarter the company missed earnings by only $0.01 and revenues by only $3.23 M. However, it should be noted that this is a semi-cyclical industrial company with a lot of moving parts, and as such, rather difficult to forecast accurately.

Nevertheless, in spite of this moderate cyclicality, the company does offer some intriguing fundamental attributes as a dividend growth stock. Their long-term dividend growth rate has been exceptional primarily resulting from their ability to generate strong and consistent free cash flow over time. Additionally, although it has been somewhat lumpy, the company has grown earnings in excess of 10% and EBITDA in excess of 9% since the fiscal year 2000 which ends in August.

1 2
View single page >> |

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.