A data-oriented review of industrial distributors (GWW), (FAST), (MSM), (WCC) today at 12:30PM ET. If you are an institutional investor interested in accessing Jay Van Sciver's research email email@example.com.
Stabilization Not So Stable? Big Problems With 2020 Estimates
Why have the shares of cyclical companies performed well despite sharply decelerating results? Are we wrong on distributors? Is the trade too crowded? These are some of the top questions we’ve gotten in recent meetings.
After the Fastenal 3Q results, industrial distributors could apparently do no wrong despite enormous differences in exposures. And we can certainly be wrong.
That said, our catalyst for FAST isn’t until 4Q19 results. GWW has already shown a sharp deceleration in results without a reset of its valuation. Our data and field work continue to point to a major reset in expectations, with frenetic activity below the surface aimed at keeping top-line results tolerable for investors. From what we can see, the October stabilization has not persisted into November.
We’ll look at what the data say about GWW/FAST trajectory, incremental effects of trade/tariffs disruptions, the potential for a tax reform hangover, and the likely evolution of industrial distribution in a black book this Thursday, December 5th at 12:30PM EST.