Head to Head Analysis: MSC Industrial Direct (NYSE:MSM) & Reliance (NYSE:RS)

Reliance (NYSE:RS) and MSC Industrial Direct (NYSE:MSM) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, institutional ownership, risk, valuation, profitability and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Reliance	5.65%	12.51%	8.47%
MSC Industrial Direct	5.91%	17.34%	9.79%

Dividends

Reliance pays an annual dividend of $5.00 per share and has a dividend yield of 1.2%. MSC Industrial Direct pays an annual dividend of $3.48 per share and has a dividend yield of 2.7%. Reliance pays out 29.1% of its earnings in the form of a dividend. MSC Industrial Direct pays out 84.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Reliance has raised its dividend for 15 consecutive years and MSC Industrial Direct has raised its dividend for 3 consecutive years.

Analyst Recommendations

This is a summary of current recommendations and price targets for Reliance and MSC Industrial Direct, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Reliance	1	5	2	1	2.33
MSC Industrial Direct	0	4	4	0	2.50

Reliance presently has a consensus price target of $379.83, indicating a potential downside of 5.10%. MSC Industrial Direct has a consensus price target of $123.43, indicating a potential downside of 5.06%. Given MSC Industrial Direct’s stronger consensus rating and higher probable upside, analysts plainly believe MSC Industrial Direct is more favorable than Reliance.

Insider and Institutional Ownership

79.3% of Reliance shares are owned by institutional investors. Comparatively, 79.3% of MSC Industrial Direct shares are owned by institutional investors. 0.4% of Reliance shares are owned by insiders. Comparatively, 19.0% of MSC Industrial Direct shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Reliance has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, MSC Industrial Direct has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.

Earnings & Valuation

This table compares Reliance and MSC Industrial Direct”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Reliance	$14.29 billion	1.43	$739.40 million	$17.20	23.27
MSC Industrial Direct	$3.77 billion	1.93	$199.33 million	$4.14	31.40

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

Summary

MSC Industrial Direct beats Reliance on 10 of the 17 factors compared between the two stocks.

About Reliance

Reliance, Inc. operates as a diversified metal solutions provider and the metals service center company in the United States, Canada, and internationally. The company distributes a line of approximately 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, and specialty steel products; and provides metals processing services to general manufacturing, non-residential construction, transportation, aerospace, energy, electronics and semiconductor fabrication, and heavy industries. It sells its products directly to original equipment manufacturers, which primarily include small machine shops and fabricators. The company was formerly known as Reliance Steel & Aluminum Co. and changed its name to Reliance, Inc. in February 2024. Reliance, Inc. was founded in 1939 and is based in Scottsdale, Arizona.

About MSC Industrial Direct

MSC Industrial Direct Co., Inc., together with its subsidiaries, distributes metalworking and maintenance, repair, and operations (MRO) products and services in the United States, Canada, Mexico, the United Kingdom, and internationally. The company's MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock products, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components, and electrical supplies. It offers stock-keeping units through its catalogs and brochures; e-commerce channels, including its website, mscdirect.com; inventory management solutions; and customer care centers, customer fulfillment centers, regional inventory centers, and warehouses. The company serves individual machine shops, manufacturing companies, and government agencies. MSC Industrial Direct Co., Inc. was founded in 1941 and is headquartered in Melville, New York.