Shares of MRC Global Inc. (MRC - Free Report) have plunged sharply since the beginning of 2020. We believe that the price decline reflects investors’ reaction to the company’s fourth-quarter results and dismal projections. Also, supply-side exposure in China might be concerning in the wake of the coronavirus outbreak.
The Houston, TX-based company belongs to the Zacks Steel – Pipe and Tube industry, which, in turn, comes under the ambit of the Zacks Industrial Products sector. The industry is currently at the bottom 11% (with the rank of 226) of more than 250 Zacks industries.
Year to date, the company’s shares have dipped 67.9% compared with the industry’s decline of 42.9% and the sector’s fall of 28.9%. Notably, the S&P 500 has declined 21.1% during the same period.
The company currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factors Affecting the Stock
So far in 2020, MRC Global has reported results for fourth-quarter 2019. Results were disappointing, as earnings and sales lagged the Zacks Consensus Estimate by 257.14% and 10.2%, respectively. On a year-over-year basis, quarterly sales declined 24.1% due to weak performances of the segments. Notably, performances of three sectors — Upstream, Midstream and Downstream — were lackluster in the quarter.
In addition to the dismal performance, weak projections provided by MRC Global must have added to the bearish sentiments for the stock. Weak market conditions are likely to adversely impact the company’s performance in the quarters ahead. For 2020, it anticipates revenues of $3,200-$3,700 million. The mid-point of $3,450 million is way below revenues of $3,662 million generated in 2019. It also predicts first-quarter sales to be flat compared with the previous quarter.
The company expects a decline of mid-single digits in sales for the U.S. and Canada segments while a low-single-digit fall is predicted for the International segment. In addition, a high-single-digit fall in sales is predicted for the Upstream sector and a mid-single-digit decline for the Midstream and Downstream sectors. Earnings in the year are predicted to be 19-56 cents per share.
In February, the company noted that its direct exposure in China is very limited. However, it depends on the supply of many valve components and commodity valves from the country. Uncertainties prevail regarding the adverse impacts of the coronavirus outbreak on MRC Global’s operations.
Currently, the Zacks Consensus Estimate for the company’s earnings is pegged at 20 cents per share for 2020 and 43 cents for 2021, marking declines of 73% and 60% from the respective 60-day-ago figures. Notably, there were eight downward revisions in estimates for 2020 and five for 2021. No upward revision in estimates has been recorded for both years in the past 60 days.
MRC Global Inc. Price and Consensus
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This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Shares of MRC Global Inc. (MRC - Free Report) have plunged sharply since the beginning of 2020. We believe that the price decline reflects investors’ reaction to the company’s fourth-quarter results and dismal projections. Also, supply-side exposure in China might be concerning in the wake of the coronavirus outbreak.
The Houston, TX-based company belongs to the Zacks Steel – Pipe and Tube industry, which, in turn, comes under the ambit of the Zacks Industrial Products sector. The industry is currently at the bottom 11% (with the rank of 226) of more than 250 Zacks industries.
Year to date, the company’s shares have dipped 67.9% compared with the industry’s decline of 42.9% and the sector’s fall of 28.9%. Notably, the S&P 500 has declined 21.1% during the same period.
The company currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factors Affecting the Stock
So far in 2020, MRC Global has reported results for fourth-quarter 2019. Results were disappointing, as earnings and sales lagged the Zacks Consensus Estimate by 257.14% and 10.2%, respectively. On a year-over-year basis, quarterly sales declined 24.1% due to weak performances of the segments. Notably, performances of three sectors — Upstream, Midstream and Downstream — were lackluster in the quarter.
In addition to the dismal performance, weak projections provided by MRC Global must have added to the bearish sentiments for the stock. Weak market conditions are likely to adversely impact the company’s performance in the quarters ahead. For 2020, it anticipates revenues of $3,200-$3,700 million. The mid-point of $3,450 million is way below revenues of $3,662 million generated in 2019. It also predicts first-quarter sales to be flat compared with the previous quarter.
The company expects a decline of mid-single digits in sales for the U.S. and Canada segments while a low-single-digit fall is predicted for the International segment. In addition, a high-single-digit fall in sales is predicted for the Upstream sector and a mid-single-digit decline for the Midstream and Downstream sectors. Earnings in the year are predicted to be 19-56 cents per share.
In February, the company noted that its direct exposure in China is very limited. However, it depends on the supply of many valve components and commodity valves from the country. Uncertainties prevail regarding the adverse impacts of the coronavirus outbreak on MRC Global’s operations.
Currently, the Zacks Consensus Estimate for the company’s earnings is pegged at 20 cents per share for 2020 and 43 cents for 2021, marking declines of 73% and 60% from the respective 60-day-ago figures. Notably, there were eight downward revisions in estimates for 2020 and five for 2021. No upward revision in estimates has been recorded for both years in the past 60 days.
MRC Global Inc. Price and Consensus
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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