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MRC Global (MRC) Displays Bright Prospects Amid Headwinds

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MRC Global Inc. (MRC - Free Report) has been benefiting from its diversified business structure across several end markets, which enables it to mitigate risks across one end market with strength across others. Of late, the company’s business in the gas utility sector has been witnessing strength, supported by increasing customer activity. In second-quarter 2021, its businesses in the gas utility sector experienced sequential growth of 28%. For the next year, it expects to generate $1 billion of revenues annually from its business in the gas utility sector.

MRC Global remains focused on rewarding shareholders handsomely through dividend payments. In 2020 and in the first six months of 2021, the company used $24 million and $12 million, respectively, for paying dividends.

The company’s efforts to expand market share, improve profitability and working capital efficiency are likely to boost performance in the quarters ahead. Also, it remains focused on lowering operating costs and reducing debts. In the second quarter, the company reduced its selling, general and administrative expenses by 2.9% on a year-over-year basis. In 2020 and in the first half of 2021, it reduced net debt of $255 million and $30 million, respectively.

However, persistent weakness across the midstream pipeline sector remains a concern for the company. In the second quarter, sales from midstream pipeline sector declined 4.6% on a year-over-year basis. Low customer demand environment might continue to affect its performance in the quarters ahead.

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Over the past year, this Zacks Rank #3 (Hold) stock has returned 39.3% compared with the industry’s growth of 56.2%.

Key Picks

Some better-ranked stocks from the same space are Tenaris S.A. (TS - Free Report) , Valmont Industries, Inc. (VMI - Free Report) and Mueller Water Products, Inc. (MWA - Free Report) . While Tenaris and Valmont Industries sport a Zacks Rank #1 (Strong Buy), Mueller Water carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Tenaris pulled off a trailing four-quarter earnings surprise of 495.15%, on average.

Valmont Industries pulled off a trailing four-quarter earnings surprise of 20.43%, on average.

Mueller Water delivered a trailing four-quarter earnings surprise of 17.76%, on average.