We have issued an updated research report on MRC Global Inc. (NYSE:MRC) on Jan 11.
This leading distributor of pipes, valves and fittings (PVF) to the energy industry currently carries a Zacks Rank #3 (Hold). Its market capitalization is approximately $1.4 billion.
A few growth drivers and certain headwinds, which might influence MRC Global, have been discussed below.
Factors Favoring MRC Global
Diversified Business Operations: MRC Global operates through three reporting segments — U.S., Canada and International. The U.S. segment was the largest revenue contributor in the third quarter of 2018, accounting for the quarter’s 80.2% sales. Operations in various geographical locations have been a boon for the company over time.
It’s worth mentioning here that MRC Global serves a vast customer base in the energy and other markets. Prime industries served include exploration, production, and extraction of underground oil and natural gas; natural gas utilities; crude oil refining; petrochemical processing; and general.
In the quarters ahead, MRC Global anticipates gaining from increased oil & gas production in the United States, which has spurred demand for facility expansion and pipeline infrastructure. Also, ease of installing new pipelines, stability in natural gas (low-cost) supply and many other factors are favorable for MRC Global.
Contracts: MRC Global stands to gain from lucrative contract wins (multi-year) and projects. In this regard, work on ten major transmission projects to offset the productivity shortfall in the Permian basin will be a boon for the company. These activities are anticipated to generate $150-$200 million revenues in 2018-2020. In addition, contracts secured from Statoil (OL:EQNR) in July 2017 and from Exxon (NYSE:XOM) Mobile in March 2017 are expected to boost the company’s top-line performances.
In the third quarter of 2018, the company’s U.S. segment gained from new contracts secured in the downstream sector.
Shareholder-Friendly Policies: MRC Global believes in rewarding its shareholders handsomely through share buybacks. In the first nine months of 2018, the company used $50 million for repurchasing roughly 2.87 million common shares. This spending was higher than $18 million used in the first nine months of 2017.
In October 2018, the company’s board of directors authorized a $150-million buyback program. This program expires in December 2019.
Factors Working Against MRC Global
Share Price Performances and Poor Valuation: Market sentiments have been against MRC Global for quite some time now. In the past six months, the company’s shares have declined 29.8%. This fall is lower than the industry’s decline of 33% but worse than the S&P 500’s decrease of 7.7%. In the third quarter of 2018, the company’s earnings of 20 cents per share lagged the Zacks Consensus Estimate by 13.04%. This was the third dismal performance by MRC Global in the past four quarters, which had an average negative earnings surprise of 31.17%.
Add a Comment
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.