USD 37.48 as of today(2019-10-20). MSM Graham Number explanation, calculation, historical data and more" />MSM Graham Number | MSC Industrial Direct Co - GuruFocus.com
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MSC Industrial Direct Co Graham Number

: USD 37.48 (As of May. 2019)
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Graham Number is a figure that measures a stock's fundamental value by taking into account the company's earnings per share and book value per share. The Graham number is the upper bound of the price range that a defensive investor should pay for the stock. According to the theory, any stock price below the Graham number is considered undervalued, and thus worth investing in.

As of today (2019-10-20), the stock price of MSC Industrial Direct Co is USD 71.90. MSC Industrial Direct Co's graham number for the quarter that ended in May. 2019 was USD 37.48. Therefore, MSC Industrial Direct Co's Price to Graham Number ratio for today is 1.92.

NYSE:MSM' s Price-to-Graham-Number Range Over the Past 10 Years
Min: 1.09   Max: 3.75
Current: 1.92

1.09
3.75

During the past 13 years, the highest Price to Graham Number ratio of MSC Industrial Direct Co was 3.75. The lowest was 1.09. And the median was 2.32.

NYSE:MSM's Price-to-Graham-Number is ranked lower than
80% of the 142 Companies
in the Industrial Distribution industry.

( Industry Median: 0.87 vs. NYSE:MSM: 1.92 )

Graham Number is a combination of asset valuation and earnings power valuation. It is a very conservative way of valuing a stock.


MSC Industrial Direct Co Graham Number Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

MSC Industrial Direct Co Annual Data
Aug09 Aug10 Aug11 Aug12 Aug13 Aug14 Aug15 Aug16 Aug17 Aug18
Graham Number Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 29.27 28.36 22.58 27.74 36.91

MSC Industrial Direct Co Quarterly Data
Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17 Nov17 Feb18 May18 Aug18 Nov18 Feb19 May19
Graham Number Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 36.51 36.88 37.49 35.60 37.48

Competitive Comparison
* 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.


MSC Industrial Direct Co Graham Number Distribution

* The bar in red indicates where MSC Industrial Direct Co's Graham Number falls into.



MSC Industrial Direct Co Graham Number Calculation

Graham Number is a concept based on Ben Graham's conservative valuation of companies.

MSC Industrial Direct Co's Graham Number for the fiscal year that ended in Aug. 2018 is calculated as

Graham Number
=sqrt of (22.5* Tangible Book per Share *EPS without NRI)
=sqrt of (22.5*10.438*5.8)
=36.91

MSC Industrial Direct Co's Graham Number for the quarter that ended in May. 2019 is calculated as

Graham Number
=sqrt of (22.5*Tangible Book per Share*EPS without NRI (TTM))
=sqrt of (22.5*11.778*5.3)
=37.48

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


MSC Industrial Direct Co  (NYSE:MSM) Graham Number Explanation

Ben Graham actually did not publish a formula like this. But he wrote in The Intelligent Investor (1948 version) regarding to the criteria for purchases:

Current price should not be more than 15 times average earnings of the past three years.

Current price should not be more than 1.5 times the book value last reported. However, a multiplier of earnings below 15 could justify a correspondingly higher multiplier of assets. As a rule of thumb we suggest that the product of the multiplier times the ratio of price to book value should not exceed 22.5. (This figure corresponds to 15 times earnings and 1.5 times book value. It would admit an issue selling at only 9 times earnings and 2.5 times asset value, etc.)

Unlike valuation methods such as DCF or Discounted Earnings, the Graham number does not take growth into the valuation. Unlike the valuation methods based on book value alone, it takes into account the earnings power. Therefore, the Graham Number is a combination of asset valuation and earnings power valuation.

In general, the Graham number is a very conservative way of valuing a stock. It cannot be applied to companies with negative book values.

MSC Industrial Direct Co's Price to Graham number Ratio for today is calculated as

Price to Graham number=Share Price (Today)/Graham number (Q: May. 2019 )
=71.90/37.48
=1.92

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Be Aware

Please keep these in mind:

1. Graham Number does not take growth into account. Therefore it underestimates the values of the companies that have good earnings growth. We feel that if the earnings per share grows more than 10% a year, Graham Number underestimates the value.
2. Graham Number punishes the companies that have temporarily low earnings. Therefore, an average of earnings makes more sense in the calculation of Graham Number.
3. Graham Numbers underestimates companies that are light with book.


MSC Industrial Direct Co Graham Number Related Terms


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