Shares of Global Industrial (NYSE: GIC) have experienced a decline in their share price so far in 2024, dropping 33% from their 52-week highs. Despite this, now might be the ideal time to consider investing in this company. Let’s dive deeper into why Global Industrial is worth a closer look.
Global Industrial, based in New York, specializes in distributing maintenance, repair, and operations (MRO) products to a wide range of industrial customers, including over 400,000 small and medium-sized businesses. The company has seen a slowdown in organic sales growth due to challenges faced by its SMB customers, such as inflation and increased interest rates.
However, Global Industrial’s strategic focus on the MRO products niche sets it apart from its competitors. The company offers a diverse range of products, including storage and shelving, material handling, janitorial and maintenance supplies, safety and security products, furniture, and more. With a customer satisfaction rate of 90%, Global Industrial has successfully established recurring transactions in the market.
One of the key factors contributing to Global Industrial’s success is its private-label products, which account for 50% of its sales. These products offer higher margins compared to national brands and have experienced significant growth over the years. Additionally, the company’s expansion into new product verticals like healthcare, hospitality, and pneumatics indicates potential for further growth.
Global Industrial recently acquired Indoff, a distributor of commercial interiors and MRO products, for $73 million. This acquisition has already boosted the company’s revenue by 15% and is expected to enhance its service offerings. By leveraging Indoff’s capabilities and integrating e-commerce solutions, Global Industrial aims to improve its gross profit margins and drive future earnings growth.
From an investment standpoint, Global Industrial currently trades at a P/E ratio of 17 and a P/FCF ratio of 14, both below the industry average. With a history of solid sales growth and a dividend yield of 2.9%, the company presents an attractive opportunity for investors. Its strong return on invested capital (ROIC) and strategic acquisitions position it for long-term success.
In conclusion, Global Industrial’s strong market position, focus on private-label products, and recent acquisition make it a compelling investment opportunity. Investors looking for a stable company with growth potential and attractive dividend yield should consider adding Global Industrial to their portfolio. Stay tuned for updates on this promising stock and other investment opportunities on Extreme Investor Network.