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Here's Why Hold Strategy is Apt for MRC Global (MRC) Stock
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MRC Global Inc. (MRC - Free Report) is benefiting from strength in the DIET sector despite the high cost of sales (due to raw material cost inflation) and operating expenses.
What’s Aiding MRC
Business Strength: MRC Global’s extensive presence across several end markets, including upstream production, midstream pipelines, gas utilities, downstream, industrial and energy transition, enables it to tap opportunities and neutralize operating risks associated with a single market. The company has been witnessing strength in the DIET sector, driven by an increase in energy transition activities in the United States. Also, an increase in refining, chemical and mining customer projects bodes well. The company expects to generate higher revenues in 2024, driven by strong level of refinery and chemical plant maintenance activities.
Also, its focus on customer service, supported by reliable operations and supply-chain management, and new product introductions bode well. Pricing actions are driving the company’s margin performance despite cost inflation. MRC Global’s adjusted gross margin increased 70 bps year over year in the fourth quarter of 2023.
Rewards to Shareholders: MRC Global intends to augment its shareholders’ wealth over time. In the first three months of 2024, the company’s dividend payments totaled $6 million. It also repurchased shares worth $5 million in the same period. In 2023, the company paid dividends of $24 million to shareholders and bought back shares worth $4 million.
Reduction of Debts: MRC Global’s cash and cash equivalents at the end of the first quarter were $146 million, higher than $131 million reported at the end of 2023. The reduction of debts remains a priority for the company. In the first quarter, MRC repaid $5 million in borrowings under revolving credit facilities. In 2023, it repaid $882 million in borrowings under revolving credit facilities. MRC Global’s focus on reducing its leverage ratio is evident as the metric was 0.6x at the end of the first quarter, the lowest in the company’s history.
In light of the above-mentioned positives, we believe, investors should retain MRC stock for now, as suggested by its current Zacks Rank #3 (Hold). Shares of MRC have risen 45.3% in the past year, outperforming the industry’s 10.9% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below.
Image: Bigstock
Here's Why Hold Strategy is Apt for MRC Global (MRC) Stock
MRC Global Inc. (MRC - Free Report) is benefiting from strength in the DIET sector despite the high cost of sales (due to raw material cost inflation) and operating expenses.
What’s Aiding MRC
Business Strength: MRC Global’s extensive presence across several end markets, including upstream production, midstream pipelines, gas utilities, downstream, industrial and energy transition, enables it to tap opportunities and neutralize operating risks associated with a single market. The company has been witnessing strength in the DIET sector, driven by an increase in energy transition activities in the United States. Also, an increase in refining, chemical and mining customer projects bodes well. The company expects to generate higher revenues in 2024, driven by strong level of refinery and chemical plant maintenance activities.
Also, its focus on customer service, supported by reliable operations and supply-chain management, and new product introductions bode well. Pricing actions are driving the company’s margin performance despite cost inflation. MRC Global’s adjusted gross margin increased 70 bps year over year in the fourth quarter of 2023.
Rewards to Shareholders: MRC Global intends to augment its shareholders’ wealth over time. In the first three months of 2024, the company’s dividend payments totaled $6 million. It also repurchased shares worth $5 million in the same period. In 2023, the company paid dividends of $24 million to shareholders and bought back shares worth $4 million.
Reduction of Debts: MRC Global’s cash and cash equivalents at the end of the first quarter were $146 million, higher than $131 million reported at the end of 2023. The reduction of debts remains a priority for the company. In the first quarter, MRC repaid $5 million in borrowings under revolving credit facilities. In 2023, it repaid $882 million in borrowings under revolving credit facilities. MRC Global’s focus on reducing its leverage ratio is evident as the metric was 0.6x at the end of the first quarter, the lowest in the company’s history.
In light of the above-mentioned positives, we believe, investors should retain MRC stock for now, as suggested by its current Zacks Rank #3 (Hold). Shares of MRC have risen 45.3% in the past year, outperforming the industry’s 10.9% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 8.2%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has improved 2.1% in the past 60 days. The stock has risen 56% in the past year.
Belden Inc. (BDC - Free Report) presently carries a Zacks Rank of 2 and has a trailing four-quarter earnings surprise of 14.7%, on average.
The consensus estimate for BDC’s 2024 earnings has increased 8.3% in the past 60 days. Shares of Belden have risen 8.8% in the past year.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. CR delivered a trailing four-quarter earnings surprise of 15.2%, on average.
The Zacks Consensus Estimate for CR’s 2024 earnings has increased 3.3% in the past 60 days. Its shares have risen 93.3% in the past year.