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Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue.
MSC Industrial Direct Co's Degree of Operating Leverage for the quarter that ended in May. 2026 was 2.95. The higher Degree of Operating Leverage, the higher operating risk the company will take.
The industry rank for MSC Industrial Direct Co's Degree of Operating Leverage or its related term are showing as below:
MSM's Degree of Operating Leverage is ranked worse than 68.35% of 158
companies
in the Industrial Distribution industry
Industry Median: 1.09
vs MSM: 2.95
MSC Industrial Direct Co (NYSE:MSM) Degree of Operating Leverage Explanation
Degree of Operating Leverage (DOL) is a leverage ratio that measures the sensitivity of a company’s operting income, also referred to as Earnings Before Interest and Taxes (EBIT), to fluctuations in its Revenue. DOL is a method used to quantify a company’s operating risk. This risk is related to the company's structure of variable costs and fixed costs. Since the fixed costs do not allow the company to adjust the operating costs, the operating risk rises with a higher fixed-to-variable costs proportion.
A high Degree of Operating Leverage indicates that the company’s fixed costs exceed its variable costs. By increasing the sales, the company can earn more profits. In addition, the company must be able to maintain relatively high sales to cover all fixed costs.
Be Aware
The use of operating leverage varies across different industries and business sectors, and the application of Degree of Operating Leverage (DOL) should be adjusted accordingly.
MSC Industrial Direct Co Degree of Operating Leverage Related Terms
MSC Industrial Direct Co Degree of Operating Leverage Historical Data
* Premium members only.
The historical data trend for MSC Industrial Direct Co's Degree of Operating Leverage can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
MSC Industrial Direct Co Degree of Operating Leverage Chart
MSM vs POOL, XMTR, CNM: Degree of Operating Leverage Comparison
For the Industrial Distribution subindustry, MSC Industrial Direct Co's Degree of Operating Leverage, along with its competitors' market caps and Degree of Operating Leverage data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
MSC Industrial Direct Co Degree of Operating Leverage vs Industrial Distribution Industry
For the Industrial Distribution industry and Industrials sector, MSC Industrial Direct Co's Degree of Operating Leverage distribution charts can be found below:
* The bar in red indicates where MSC Industrial Direct Co's Degree of Operating Leverage falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
** TTM data of EBIT and Revenue was used to calculate Degree of Operating Leverage.
*** Please be aware that the Degree of Operating Leverage calculations are based on company-level data using the primary share class. The calculated data provided is for demonstration purposes and may slightly differ from the results displayed in the title due to potential variations caused by currency exchange rate differences throughout the year.
What does a Degree of Operating Leverage of 2.95 mean?
MSC Industrial Direct Co (MSM) has a Degree of Operating Leverage of 2.95 as of May. 2026. Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue. View historical data for MSC Industrial Direct Co and its competitors. According to the industry distribution chart, MSC Industrial Direct Co ranks #108 out of 158 companies in the Industrial Distribution industry, placing it in the top 68.4%.
Is MSC Industrial Direct Co's Degree of Operating Leverage too high?
MSC Industrial Direct Co's current Degree of Operating Leverage is 2.95. The Industrial Distribution industry median Degree of Operating Leverage is 1.09. MSC Industrial Direct Co's value of 2.95 is 170.6% above this industry median. Based on the distribution chart, MSC Industrial Direct Co ranks #108 out of 158 companies in the Industrial Distribution industry, which is below the industry midpoint. Overall, MSC Industrial Direct Co has a GF Score™ of 81/100 and is considered Modestly Overvalued, reflecting its overall financial health beyond just this single metric.
How does MSC Industrial Direct Co's Degree of Operating Leverage compare to POOL and XMTR?
According to the Industrial Distribution industry distribution chart, MSC Industrial Direct Co ranks #108 out of 158 companies for Degree of Operating Leverage. This places MSC Industrial Direct Co in the lower half of its industry. The industry median Degree of Operating Leverage is 1.09. MSC Industrial Direct Co's value of 2.95 is 170.6% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Degree of Operating Leverage for an Industrial Distribution company?
The median Degree of Operating Leverage among Industrial Distribution companies is 1.09, based on 158 companies in the industry. Companies in the top quartile (top 25%) have a Degree of Operating Leverage significantly above this median, while those in the bottom quartile fall well below. However, Degree of Operating Leverage should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. MSC Industrial Direct Co's current Degree of Operating Leverage of 2.95 is 170.6% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Degree of Operating Leverage mean?
A high Degree of Operating Leverage can signal that a stock is expensive relative to its fundamentals. Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue. View historical data for MSC Industrial Direct Co and its competitors. For the Industrial Distribution industry, the median Degree of Operating Leverage is 1.09 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. MSC Industrial Direct Co's current Degree of Operating Leverage is 2.95. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is MSC Industrial Direct Co stock overvalued right now?
Based on GuruFocus' analysis, MSC Industrial Direct Co (MSM) is currently considered Modestly Overvalued. The stock's GF Value™ is $93.32, compared to a current price of $119.52 — trading 28.1% above its estimated fair value. The current Degree of Operating Leverage is 2.95 and 170.6% above the Industrial Distribution industry median of 1.09. MSC Industrial Direct Co's overall GF Score™ is 81/100 with 8 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Degree of Operating Leverage calculated?
Degree of Operating Leverage is calculated from a company's financial statements. For MSC Industrial Direct Co (MSM), the current Degree of Operating Leverage is 2.95 as of May. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is MSC Industrial Direct Co (MSM) Overvalued in 2026?
Based on GuruFocus' analysis, MSC Industrial Direct Co stock appears to be overvalued.
The current stock price of $119.52 is trading 28.1% above its estimated GF Value™ of $93.32.
GuruFocus considers MSC Industrial Direct Co to be Modestly Overvalued.
Key valuation signals for MSM:
Degree of Operating Leverage: 2.95
GF Value™: $93.32 vs. price of $119.52 (28.1% above fair value)
Industry Position: 170.6% above the Industrial Distribution median (#108 of 158)
No single metric tells the full story. See the MSM stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Founded in 1941, MSC Industrial Direct originally manufactured and sold cutting tools to metalworking shops in New York. Through a series of acquisitions and organic expansions, MSC has grown into an industrial distribution powerhouse with a focus on specialized metalworking products and services. The firm also distributes a wide breadth of maintenance, repair, and operations supplies. MSC primarily operates in North America, where it derives over 95% of its revenue.
81GF Score
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