Narrow-Moat-Rated MSC Industrial Reports Solid Numbers to Start Fiscal 2023

We raised our fair value estimate by $1 to $99 following MSC’s fiscal first-quarter results, largely due to the time value of money since our last update. We remain confident in the company’s ability to grow sales in 2023, despite some cooling in industrial markets. Management reaffirmed its 2023 guidance, which calls for 5%-9% average daily sales growth. The low end of the company’s range implies a slowdown in industrial markets, while the high end reflects a flat economic environment. To us, this shows MSC’s exposure to improving end markets, such as aerospace and oil and gas will support sales growth in the near term. As a result, we’re projecting between 5% and 6% sales growth in 2023 for the company.