Industrial supplies company MSC Industrial Direct (NYSE: MSM) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 2.7% year on year to $978.2 million. Its non-GAAP profit of $1.09 per share was 6.3% above analysts’ consensus estimates.
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MSC Industrial (MSM) Q3 CY2025 Highlights:
- Revenue: $978.2 million vs analyst estimates of $964.1 million (2.7% year-on-year growth, 1.5% beat)
- Adjusted EPS: $1.09 vs analyst estimates of $1.03 (6.3% beat)
- Adjusted EBITDA: $109.6 million vs analyst estimates of $107.1 million (11.2% margin, 2.3% beat)
- Operating Margin: 8.6%, in line with the same quarter last year
- Free Cash Flow Margin: 6%, down from 8.5% in the same quarter last year
- Market Capitalization: $4.85 billion
Company Overview
Founded in NYC’s Little Italy, MSC Industrial Direct (NYSE: MSM) provides industrial supplies and equipment, offering vast and reliable selection for customers such as contractors
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, MSC Industrial’s sales grew at a sluggish 3.4% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a tough starting point for our analysis.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. MSC Industrial’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 3% annually. 
This quarter, MSC Industrial reported modest year-on-year revenue growth of 2.7% but beat Wall Street’s estimates by 1.5%.
Looking ahead, sell-side analysts expect revenue to grow 4% over the next 12 months. While this projection indicates its newer products and services will spur better top-line performance, it is still below average for the sector.
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Operating Margin
MSC Industrial has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.5%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, MSC Industrial’s operating margin decreased by 1.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
This quarter, MSC Industrial generated an operating margin profit margin of 8.6%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for MSC Industrial, its EPS declined by 4.4% annually over the last five years while its revenue grew by 3.4%. This tells us the company became less profitable on a per-share basis as it expanded.
We can take a deeper look into MSC Industrial’s earnings to better understand the drivers of its performance. As we mentioned earlier, MSC Industrial’s operating margin was flat this quarter but declined by 1.3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For MSC Industrial, its two-year annual EPS declines of 22.9% show it’s continued to underperform. These results were bad no matter how you slice the data.
In Q3, MSC Industrial reported adjusted EPS of $1.09, up from $1.03 in the same quarter last year. This print beat analysts’ estimates by 6.3%. Over the next 12 months, Wall Street expects MSC Industrial’s full-year EPS of $3.75 to grow 10.2%.
Key Takeaways from MSC Industrial’s Q3 Results
It was good to see MSC Industrial narrowly top analysts’ revenue expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 2.3% to $89 immediately following the results.
MSC Industrial may have had a good quarter, but does that mean you should invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
