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Why Is MRC (MRC) Down 1.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for MRC Global (MRC - Free Report) . Shares have lost about 1.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MRC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
MRC Global Q3 Earnings Match Estimates, Revenues Miss
MRC Global reported third-quarter 2023 adjusted earnings (excluding 1 cent from non-recurring items) of 32 cents per share, which matched the Zacks Consensus Estimate. The bottom line declined 23.8% year over year.
Total revenues of $888 million missed the consensus estimate of $934 million. The top line decreased 2% year over year due to lower volume in the Gas Utilities sector.
Revenues by Product Line
Based on MRC Global’s product line, revenues from carbon pipe, fittings and flanges decreased 3.8% year over year to $281 million. The same from valves, automation, measurement and instrumentation was up 5.5% from the year-ago quarter’s figure to $306 million.
Gas product revenues decreased 8.1% to $191 million. Sales for general products increased 9.4% to $70 million. The same for stainless steel, alloy pipe and fittings declined 24.5% to $40 million.
Revenues by Sector
Effective first-quarter 2023, MRC Global combined its Upstream Production and Midstream Pipeline into one sector, which is the PTI sector.
Based on the sectors served, revenues from the Gas utilities sector decreased 13% year over year to $314 million, while the DIET sector sales increased 1% year over year to $279 million. Sales from the PTI sector increased 10% year over year to $295 million.
Revenues by Segment
Sales generated from the U.S. segment (representing 83.9% of third-quarter revenues) totaled $745 million, down 3% year over year. The results benefited from decreased demand in the Gas Utilities sector.
Revenues from the Canada segment (4% of the quarter’s revenues) increased 3% year over year to $38 million due to strong momentum in the DIET and PTI sectors.
Sales from the International segment (12.1% of the quarter’s revenues) surged 6% to $105 million due to higher revenues from the PTI sector, primarily in the Middle East and the U.K., followed by the DIET sector in the Netherlands.
Margin Profile
In the quarter under review, MRC Global’s cost of sales decreased 4.6% year over year to $705 million. The adjusted gross profit in the quarter decreased 4.5% year over year to $189 million. The adjusted gross margin was 21.3% in the reported quarter compared with 21.9% in the year-ago period. Selling, general and administrative expenses were down 66.7% year over year to $126 million. Adjusted EBITDA decreased 14.6% year over year to $70 million.
Balance Sheet and Cash Flow
Exiting the third quarter, MRC Global had a cash balance of $52 million compared with $32 million at the end of December 2022. Long-term debt, net, was $300 million at the end of the third quarter compared with $337 million at the end of December 2022.
In the first nine months of 2023, MRC Global generated net cash of $92 million in operating activities against $30 million cash used in the year-ago period. Capital spent on purchasing property, plant and equipment was $10 million, up 25% from the year-ago reported number.
In the first nine months, MRC paid dividends of $18 million, flat year over year.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -62.07% due to these changes.
VGM Scores
Currently, MRC has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise MRC has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
MRC is part of the Zacks Steel - Pipe and Tube industry. Over the past month, Valmont Industries (VMI - Free Report) , a stock from the same industry, has gained 12.2%. The company reported its results for the quarter ended September 2023 more than a month ago.
Valmont reported revenues of $1.05 billion in the last reported quarter, representing a year-over-year change of -4.3%. EPS of $4.12 for the same period compares with $3.49 a year ago.
Valmont is expected to post earnings of $3.06 per share for the current quarter, representing a year-over-year change of -14.3%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Valmont. Also, the stock has a VGM Score of B.
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Why Is MRC (MRC) Down 1.4% Since Last Earnings Report?
It has been about a month since the last earnings report for MRC Global (MRC - Free Report) . Shares have lost about 1.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MRC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
MRC Global Q3 Earnings Match Estimates, Revenues Miss
MRC Global reported third-quarter 2023 adjusted earnings (excluding 1 cent from non-recurring items) of 32 cents per share, which matched the Zacks Consensus Estimate. The bottom line declined 23.8% year over year.
Total revenues of $888 million missed the consensus estimate of $934 million. The top line decreased 2% year over year due to lower volume in the Gas Utilities sector.
Revenues by Product Line
Based on MRC Global’s product line, revenues from carbon pipe, fittings and flanges decreased 3.8% year over year to $281 million. The same from valves, automation, measurement and instrumentation was up 5.5% from the year-ago quarter’s figure to $306 million.
Gas product revenues decreased 8.1% to $191 million. Sales for general products increased 9.4% to $70 million. The same for stainless steel, alloy pipe and fittings declined 24.5% to $40 million.
Revenues by Sector
Effective first-quarter 2023, MRC Global combined its Upstream Production and Midstream Pipeline into one sector, which is the PTI sector.
Based on the sectors served, revenues from the Gas utilities sector decreased 13% year over year to $314 million, while the DIET sector sales increased 1% year over year to $279 million. Sales from the PTI sector increased 10% year over year to $295 million.
Revenues by Segment
Sales generated from the U.S. segment (representing 83.9% of third-quarter revenues) totaled $745 million, down 3% year over year. The results benefited from decreased demand in the Gas Utilities sector.
Revenues from the Canada segment (4% of the quarter’s revenues) increased 3% year over year to $38 million due to strong momentum in the DIET and PTI sectors.
Sales from the International segment (12.1% of the quarter’s revenues) surged 6% to $105 million due to higher revenues from the PTI sector, primarily in the Middle East and the U.K., followed by the DIET sector in the Netherlands.
Margin Profile
In the quarter under review, MRC Global’s cost of sales decreased 4.6% year over year to $705 million. The adjusted gross profit in the quarter decreased 4.5% year over year to $189 million. The adjusted gross margin was 21.3% in the reported quarter compared with 21.9% in the year-ago period. Selling, general and administrative expenses were down 66.7% year over year to $126 million. Adjusted EBITDA decreased 14.6% year over year to $70 million.
Balance Sheet and Cash Flow
Exiting the third quarter, MRC Global had a cash balance of $52 million compared with $32 million at the end of December 2022. Long-term debt, net, was $300 million at the end of the third quarter compared with $337 million at the end of December 2022.
In the first nine months of 2023, MRC Global generated net cash of $92 million in operating activities against $30 million cash used in the year-ago period. Capital spent on purchasing property, plant and equipment was $10 million, up 25% from the year-ago reported number.
In the first nine months, MRC paid dividends of $18 million, flat year over year.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -62.07% due to these changes.
VGM Scores
Currently, MRC has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise MRC has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
MRC is part of the Zacks Steel - Pipe and Tube industry. Over the past month, Valmont Industries (VMI - Free Report) , a stock from the same industry, has gained 12.2%. The company reported its results for the quarter ended September 2023 more than a month ago.
Valmont reported revenues of $1.05 billion in the last reported quarter, representing a year-over-year change of -4.3%. EPS of $4.12 for the same period compares with $3.49 a year ago.
Valmont is expected to post earnings of $3.06 per share for the current quarter, representing a year-over-year change of -14.3%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Valmont. Also, the stock has a VGM Score of B.