We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Reasons Why You Should Avoid Betting on MRC Global (MRC)
Read MoreHide Full Article
MRC Global (MRC - Free Report) has failed to impress investors with its recent operational performance on account of softness in the Gas Utilities and Production & Transmission Infrastructure (PTI) sectors and rising operating costs. These factors are likely to impede MRC Global’s earnings in the quarters ahead.
Let’s discuss the factors, which are likely to continue taking a toll on this current Zacks Rank #4 (Sell) company.
Business Weakness: Decreased customer spending for modernization and replacement activity, and delayed customer projects are affecting the Gas Utilities and PTI sectors. Revenues from the company’s Gas Utilities and PTI sectors decreased 21% and 15% year over year, respectively, in the fourth quarter of 2023. MRC Global expects overall revenues in the range of flat to decline in low-to-mid single digits in 2024.
Steep Costs: MRC Global has been dealing with the adverse impacts of the high cost of sales (due to raw material cost inflation). In 2023, its cost of sales remained high at $2.72 billion. Selling, general and administrative expenses climbed 7% to $503 million in the same period due to higher employee-related costs and associated benefit costs. In 2022, the company’s cost of sales recorded a year-over-year increase of 22.4%. Selling, general and administrative expenses rose 14.6% year over year in 2022. Escalating costs pose a threat to the company’s bottom line.
Supply-Chain Constraints: Despite the relaxed COVID restrictions in China, recent geopolitical conflicts may potentially further constrain the global supply chain and impact the availability of parts, particularly for valves. Labor constraints, arising from the post-pandemic improvement of employment rates and increased competition among companies to attract and retain employees, are also worrisome in the quarters ahead.
Southbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for MRC’s 2024 earnings has been revised 14.2% downward.
Image: Bigstock
Reasons Why You Should Avoid Betting on MRC Global (MRC)
MRC Global (MRC - Free Report) has failed to impress investors with its recent operational performance on account of softness in the Gas Utilities and Production & Transmission Infrastructure (PTI) sectors and rising operating costs. These factors are likely to impede MRC Global’s earnings in the quarters ahead.
Let’s discuss the factors, which are likely to continue taking a toll on this current Zacks Rank #4 (Sell) company.
Business Weakness: Decreased customer spending for modernization and replacement activity, and delayed customer projects are affecting the Gas Utilities and PTI sectors. Revenues from the company’s Gas Utilities and PTI sectors decreased 21% and 15% year over year, respectively, in the fourth quarter of 2023. MRC Global expects overall revenues in the range of flat to decline in low-to-mid single digits in 2024.
Steep Costs: MRC Global has been dealing with the adverse impacts of the high cost of sales (due to raw material cost inflation). In 2023, its cost of sales remained high at $2.72 billion. Selling, general and administrative expenses climbed 7% to $503 million in the same period due to higher employee-related costs and associated benefit costs. In 2022, the company’s cost of sales recorded a year-over-year increase of 22.4%. Selling, general and administrative expenses rose 14.6% year over year in 2022. Escalating costs pose a threat to the company’s bottom line.
Supply-Chain Constraints: Despite the relaxed COVID restrictions in China, recent geopolitical conflicts may potentially further constrain the global supply chain and impact the availability of parts, particularly for valves. Labor constraints, arising from the post-pandemic improvement of employment rates and increased competition among companies to attract and retain employees, are also worrisome in the quarters ahead.
Southbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for MRC’s 2024 earnings has been revised 14.2% downward.
MRC Global Inc. Price and Consensus
MRC Global Inc. price-consensus-chart | MRC Global Inc. Quote
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 10.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 2.5% in the past 60 days. The stock has gained 38.5% in the past year.
Caterpillar Inc. (CAT - Free Report) presently carries a Zacks Rank #2 (Buy) and a trailing four-quarter earnings surprise of 19.7%, on average.
CAT’s earnings estimates have increased 0.7% for 2024 in the past 60 days. Shares of Caterpillar have risen 61.5% in the past year.
A. O. Smith Corporation (AOS - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 12%.
The Zacks Consensus Estimate for AOS’ 2024 earnings increased 0.5% in the past 60 days. Shares of A. O. Smith have soared 26% in the past year.