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Momentum

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MRC Global Inc. (MRC - Analyst Report), a Zacks #1 Rank (Strong Buy) distributor of machine tools and accessories, reached a new 52-week high of $28.55 on December 4, 2012. The company is showing strong momentum right now, thanks to solid third quarter results and the recently concluded acquisition of Production Specialty Services.

Driving Catalysts

MRC Global has long been acquiring assets with a clear intention of expanding into different regions. Recently, the company signed agreements to acquire assets of Production Specialty Services, Inc. The transaction will enhance the company’s position in Texas and New Mexico.

In addition to acquisitions, the company announced solid third quarter financial results on October 26. Earnings per share of 61 cents beat the Zacks Consensus Estimate by 24% and rose by more than 130% from the year-ago quarter.

Net sales soared 6% to $1.45 billion on the back of healthy North American operations and increased infrastructure spending.

Earnings Estimates Move Higher

Over the last 60 days, the Zacks Consensus Estimate for 2012 gained nearly 4% to $1.91 per share, as 5 of 6 estimates were revised higher. As for 2013, the Zacks Consensus Estimate is up 4.7% to $2.46 on 8 upward revisions out of 9 total estimates.

These estimates reflect year-over-year growth of 429.6% for 2012 and 28.8% for 2013.

Valuation & Technicals

MRC Global Inc. is currently trading at a forward P/E multiple of 14.8, a 3.0% discount from its peer group average of 15.2. On a P/S basis, shares trade at 0.5x, versus the peer group average of 0.6x. The company offers a ROE of 15.0%.

The last six months have been pretty good for the company as the share price has trended 40% higher to $28.00. Solid returns and a rising Zacks Consensus Estimate add to the company’s attractiveness.

MRC Global Inc. is headquartered in Houston, Texas, and was founded in 2006. It operates as a subsidiary of PVF Holdings LLC and specializes in the distribution of pipes, valves, and fittings to the energy industry worldwide. Prior to January 2012, the company was popularly known as McJunkin Red Man Holding Corporation. It has a current market capitalization of approximately $2.85 billion.


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