Comparing Systemax (SYX) & MSC Industrial Direct (MSM)

Systemax (NYSE:SYX) and MSC Industrial Direct (NYSE:MSM) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, earnings, dividends, profitability and risk.

Earnings and Valuation

This table compares Systemax and MSC Industrial Direct’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Systemax $1.27 billion 0.80 $40.40 million $1.30 20.97
MSC Industrial Direct $3.20 billion 1.50 $329.22 million $5.08 16.94

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.

Volatility & Risk

Systemax has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500. Comparatively, MSC Industrial Direct has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Systemax and MSC Industrial Direct, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Systemax 0 0 2 0 3.00
MSC Industrial Direct 0 8 7 0 2.47

Systemax presently has a consensus target price of $45.00, suggesting a potential upside of 65.08%. MSC Industrial Direct has a consensus target price of $100.23, suggesting a potential upside of 16.51%. Given Systemax’s stronger consensus rating and higher possible upside, equities analysts plainly believe Systemax is more favorable than MSC Industrial Direct.

Profitability

This table compares Systemax and MSC Industrial Direct’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Systemax 19.10% 23.98% 11.61%
MSC Industrial Direct 10.28% 21.36% 13.06%

Dividends

Systemax pays an annual dividend of $0.44 per share and has a dividend yield of 1.6%. MSC Industrial Direct pays an annual dividend of $2.52 per share and has a dividend yield of 2.9%. Systemax pays out 33.8% of its earnings in the form of a dividend. MSC Industrial Direct pays out 49.6% 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.

Insider & Institutional Ownership

28.4% of Systemax shares are owned by institutional investors. Comparatively, 76.5% of MSC Industrial Direct shares are owned by institutional investors. 68.0% of Systemax shares are owned by insiders. Comparatively, 31.3% of MSC Industrial Direct shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

MSC Industrial Direct beats Systemax on 10 of the 17 factors compared between the two stocks.

About Systemax

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.

About MSC Industrial Direct

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.

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