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MRC Global (MRC) Displays Solid Prospects, Headwinds Persist
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On Oct 1, we issued an updated research report on MRC Global Inc. (MRC - Free Report) .
The company is likely to continue benefiting from several growth drivers in the quarters ahead. However, it is exposed to various challenges, which might take a toll on the firm.
Present Scenario
MRC Global has been benefiting from lucrative contract wins and projects over the past few quarters. The company secured new contracts from Noble Midstream and Ameren in the first half of 2020. Also, it renewed a number of five year contracts with its gas utility customers, including three of its largest — Dominion, PG&E and TECO Energy. It is worth noting that in the 12 months ended Jun 30, 2020, the company generated roughly 55% of revenues from its top 25 customers.
Also, MRC Global’s presence across several end markets, including upstream production, midstream pipelines, chemicals & refining, and gas utilities has been enabling it to neutralize operating risks related to a single market. Also, its focus on expanding market share, enhancing profitability and working capital efficiency is likely to be advantageous.
In addition, it remains committed to rewarding shareholders handsomely through dividend payments. In 2019, the company used $75 million for repurchasing shares and $24 million for paying dividends. Moreover, in both the first and second quarters of 2020, the company used $6 million for paying out dividends.
However, low customer demand, weakness in the oil & gas industry, reduced customer budgets and unfavorable commodity price environment weigh on its top-line performance in the near term. Also, MRC Global’s high-debt profile poses a concern. In the last three years (2017-2019), its long-term debt rose 10% (CAGR). The metric was $470 million at the end of the second quarter of 2020. Further increase in debt levels can raise the company’s financial obligations and prove detrimental to its profitability.
Further, it faces stiff competition from several of its peers in the industry like DXP Enterprises, Inc. (DXPE - Free Report) , Forum Energy Technologies, Inc. (FET - Free Report) and Helix Energy Solutions Group, Inc. (HLX - Free Report) .
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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MRC Global (MRC) Displays Solid Prospects, Headwinds Persist
On Oct 1, we issued an updated research report on MRC Global Inc. (MRC - Free Report) .
The company is likely to continue benefiting from several growth drivers in the quarters ahead. However, it is exposed to various challenges, which might take a toll on the firm.
Present Scenario
MRC Global has been benefiting from lucrative contract wins and projects over the past few quarters. The company secured new contracts from Noble Midstream and Ameren in the first half of 2020. Also, it renewed a number of five year contracts with its gas utility customers, including three of its largest — Dominion, PG&E and TECO Energy. It is worth noting that in the 12 months ended Jun 30, 2020, the company generated roughly 55% of revenues from its top 25 customers.
Also, MRC Global’s presence across several end markets, including upstream production, midstream pipelines, chemicals & refining, and gas utilities has been enabling it to neutralize operating risks related to a single market. Also, its focus on expanding market share, enhancing profitability and working capital efficiency is likely to be advantageous.
In addition, it remains committed to rewarding shareholders handsomely through dividend payments. In 2019, the company used $75 million for repurchasing shares and $24 million for paying dividends. Moreover, in both the first and second quarters of 2020, the company used $6 million for paying out dividends.
However, low customer demand, weakness in the oil & gas industry, reduced customer budgets and unfavorable commodity price environment weigh on its top-line performance in the near term. Also, MRC Global’s high-debt profile poses a concern. In the last three years (2017-2019), its long-term debt rose 10% (CAGR). The metric was $470 million at the end of the second quarter of 2020. Further increase in debt levels can raise the company’s financial obligations and prove detrimental to its profitability.
Further, it faces stiff competition from several of its peers in the industry like DXP Enterprises, Inc. (DXPE - Free Report) , Forum Energy Technologies, Inc. (FET - Free Report) and Helix Energy Solutions Group, Inc. (HLX - Free Report) .
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>