Portfolio: Zacks Deep Value

MSC Industrial Direct Co., Inc. (NYSE: MSM) is one of the largest North American distributors of metalworking and maintenance, repair, and operations (MRO) products and services. MSC provides nearly 2.4 million items—including cutting tools, machinery, safety supplies, fasteners, plumbing, janitorial, and electrical supplies—to customers ranging from small machine shops to Fortune 100 manufacturers and government agencies.

The company has demonstrated resilience in downturns with margin stability even during soft industrial cycles by managing costs, improving price/cost dynamics, and optimizing supplier rebates. But continued weakness in manufacturing and construction, driven by high interest rates and delayed capital projects, has pressured sales growth throughout 2024 and into the first half of 2025. However, we think this cyclical downturn is likely fully priced in, and shares are ready to rebound as the business cycles back to growth in the 2nd half of 2025 into 2026 and beyond.