Financial Analysis: Flow International Corp (FLOW) and MSC Industrial Direct (MSM)

Flow International Corp (NASDAQ: FLOW) and MSC Industrial Direct (NYSE:MSM) are both industrial machinery companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.

Profitability

This table compares Flow International Corp and MSC Industrial Direct’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Flow International Corp N/A N/A N/A
MSC Industrial Direct 8.01% 19.42% 11.28%

Analyst Ratings

This is a summary of current ratings and target prices for Flow International Corp and MSC Industrial Direct, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Flow International Corp 1 2 5 0 2.50
MSC Industrial Direct 1 10 5 0 2.25

Flow International Corp currently has a consensus price target of $43.00, indicating a potential upside of 3.56%. MSC Industrial Direct has a consensus price target of $89.62, indicating a potential upside of 9.34%. Given MSC Industrial Direct’s higher possible upside, analysts clearly believe MSC Industrial Direct is more favorable than Flow International Corp.

Insider & Institutional Ownership

74.1% of MSC Industrial Direct shares are held by institutional investors. 31.3% of MSC Industrial Direct shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

MSC Industrial Direct pays an annual dividend of $1.80 per share and has a dividend yield of 2.2%. Flow International Corp does not pay a dividend. MSC Industrial Direct pays out 44.6% of its earnings in the form of a dividend. Flow International Corp has increased its dividend for 6 consecutive years.

Earnings & Valuation

This table compares Flow International Corp and MSC Industrial Direct’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Flow International Corp N/A N/A N/A $0.04 1,038.00
MSC Industrial Direct $2.89 billion 1.60 $231.43 million $4.04 20.29

MSC Industrial Direct has higher revenue and earnings than Flow International Corp. MSC Industrial Direct is trading at a lower price-to-earnings ratio than Flow International Corp, indicating that it is currently the more affordable of the two stocks.

Summary

MSC Industrial Direct beats Flow International Corp on 9 of the 12 factors compared between the two stocks.

About Flow International Corp

SPX FLOW, Inc. provides various engineered solutions worldwide. The company engineers, designs, manufactures, and markets products and solutions used to process, blend, filter, dry, meter, and transport fluids with a focus on original equipment installation, including turn-key systems, modular systems, and components, as well as aftermarket components and support services. It operates through three segments: Food and Beverage, Power and Energy, and Industrial. The Food and Beverage segment offers mixing, drying, evaporation, and separation systems and components; heat exchangers, and reciprocating and centrifugal pump technologies; and turn-key systems primarily under the Anhydro, APV, Bran+Luebbe, Gerstenberg Schroeder, LIGHTNIN, Seital, and Waukesha Cherry-Burrell brands. The Power and Energy segment provides pumps, valves, and related accessories primarily for customers in oil and gas, and nuclear and other conventional power industries under the APV, Bran+Luebbe, ClydeUnion Pumps, Copes-Vulcan, Dollinger Filtration, LIGHTNIN, M&J Valve, Plenty, and Vokes brands. The Industrial segment offers air dryers, filtration equipment, mixers, pumps, hydraulic technologies, and heat exchangers under the Airpel, APV, Bolting Systems, Delair, Deltech, Hankison, Jemaco, Johnson Pump, LIGHTNIN, Power Team, and Stone brands. It primarily serves customers in chemical, air treatment, mining, pharmaceutical, marine, shipbuilding, infrastructure construction, general industrial, and water treatment industries. SPX FLOW, Inc. is headquartered in Charlotte, North Carolina.

About MSC Industrial Direct

MSC Industrial Direct Co., Inc. is a North American distributor of metalworking and maintenance, repair and operations (MRO) products and services. The Company’s range of MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components and electrical supplies. The Company serves a range of customers throughout the United States, Canada and the United Kingdom, from individual machine shops, to manufacturing companies, to government agencies, such as the General Services Administration and the Department of Defense. The Company also serves durable and non-durable goods manufacturing, education and healthcare markets, among others. As of September 3, 2016, the Company had operated a network of 12 customer fulfillment centers.

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