MSM

MSC Industrial ($MSM) Director Bets Big with $11M Stock Purchase Following Earnings Slump, Contrasting CEO's Recent Selling

04/09/2025 23:23

MSC Industrial Direct Co Inc ($MSM) Director Mitchell Jacobson has made headlines with a massive stock purchase totaling approximately $11.07 million following the company's recent share price decline. According to SEC Form 4 filings disclosed on April 9, Jacobson acquired 131,551 shares at an average price of $69.51 on April 7, followed by an additional 27,642 shares at $69.77 the next day. The combined purchase amounts to 159,193 shares worth about $11.07 million. The filings note that these shares were purchased through trusts where Jacobson serves as the settlor and maintains the power to remove and replace trustees. The timing of this substantial insider purchase is particularly noteworthy as it came immediately after MSC Industrial reported disappointing fiscal second-quarter results for 2025. On April 3, the company announced quarterly earnings of $0.72 per share for the period ending February 28, significantly down from $1.18 per share a year earlier. Revenue dropped 4.7% to $891.72 million, falling short of analyst expectations of $899.55 million. Following the earnings release, MSM shares plummeted from $75.16 on April 3 to $71.22 on April 4, representing a 5.2% decline, and further fell to $70.15 by April 7 – precisely when Jacobson began his buying spree. MSC Industrial Direct is a leading distributor of industrial equipment in the United States, with a strong focus on metalworking and maintenance, repair, and operations (MRO) products. With a market capitalization of approximately $3.9 billion, the mid-cap company generates annual revenue of around $3.75 billion. Despite challenges in the manufacturing sector, MSC has maintained relatively stable financial performance over the years. Notably, Jacobson's purchase stands in stark contrast to recent selling activities by other company insiders. In November 2024, CEO Erik Gershwind sold 50,000 shares at $90.36 (worth approximately $4.52 million), while Director Philip Peller divested 900 shares (about $80,000) during the same month. Earlier in July 2024, SVP Kimberly Shacklett also sold 4,885 shares (approximately $413,000). MSC Industrial has been experiencing a consistent downward trend in financial performance. In the quarter ending May 2024, earnings per share were $1.33 (down from $1.74 year-over-year); for the August 2024 quarter, they fell to $1.03 (down from $1.64); and for the November 2024 quarter, EPS further declined to $0.86 (down from $1.25). Revenues have similarly shown continuous decreases. Despite these challenges, the company offers a robust dividend yield of 4.85% (annual payout of $3.40) and maintains a relatively healthy debt-to-equity ratio of 39.5%. Its P/E ratio stands at 18.3x, which appears reasonable compared to industry averages. Wall Street analysts generally maintain a 'hold' rating on MSC Industrial, with the median price target recently adjusted downward from $84.00 to $80.00. However, Jacobson's substantial purchase could be interpreted as a strong vote of confidence from an insider regarding the company's long-term value at current price levels. Additionally, the company's June 2024 acquisition of Aptex and Premier Tool Grinding reflects strategic efforts to strengthen its regional presence and expand its value proposition. These acquisitions suggest management continues to invest in long-term growth despite challenging market conditions. Despite the consecutive quarters of underperformance and the headwinds facing the manufacturing sector, Jacobson's massive stock purchase may indicate an insider belief that the current share price undervalues the company. Investors should keep a close eye on upcoming quarterly results, potential signs of recovery in the industrial sector, and the outcomes of the company's restructuring and acquisition strategies.

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