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MSC Industrial Direct Co., Inc. (MSM) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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MSC Industrial Direct Co., Inc. (MSM)

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Intrinsic Value (DCF)

Current$86.13
→
Intrinsic$99.78
+16%
$65.55$99.78$164.85
Market implies 5% growth for 5 years
MSM shows 16% potential upside using 8% growth — reasonable if fundamentals hold.
At $86, the market prices in only 5% growth — below historical 8%, suggesting low expectations.
Range: Bear $66 → Bull $165. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →4%6%8%10%
8%$120$132$144$158
10%$83$91$100$109
12%$63$69$75$82
14%$50$54$59$65

Bull Case

  • Bull case ($165) offers 91% upside at 10% growth, 9% discount
  • 14% margin of safety vs. base case estimate
  • Market-implied growth (5%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($66) implies 24% downside at 6% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$360.41M
Year 2$389.25M
Year 3$420.39M
Year 4$454.02M
Year 5$490.34M
Terminal$7.21B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$333.72MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is MSM stock undervalued or overvalued?
🟢 UNDERVALUED

MSM trades at $86.13 vs. our DCF-derived intrinsic value of $99.78, implying +17% upside. At a 10.0% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of MSM's future cash flows. The bear case ($69.90) still suggests upside, providing margin of safety.

What is MSM's intrinsic value?

Using a 5-year DCF model: Base FCF of $334M, projected at 8.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $483M net debt and dividing by 0.06B shares: Bear $69.90 | Base $99.78 | Bull $139.74. Current price $86.13 implies +17% to base case.

How is MSM's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($6.06B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 18.2x.