Comparing Rush Enterprises (NASDAQ:RUSHA) and MSC Industrial Direct (NYSE:MSM)

Rush Enterprises (NASDAQ:RUSHA) and MSC Industrial Direct (NYSE:MSM) are both mid-cap industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, valuation, profitability and institutional ownership.

Profitability

This table compares Rush Enterprises and MSC Industrial Direct’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rush Enterprises	3.67%	11.65%	5.84%
MSC Industrial Direct	5.91%	17.34%	9.79%

Institutional & Insider Ownership

84.4% of Rush Enterprises shares are held by institutional investors. Comparatively, 79.3% of MSC Industrial Direct shares are held by institutional investors. 12.7% of Rush Enterprises shares are held by insiders. Comparatively, 19.0% of MSC Industrial Direct shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Rush Enterprises and MSC Industrial Direct”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rush Enterprises	$7.43 billion	0.78	$263.78 million	$2.21	22.56
MSC Industrial Direct	$3.77 billion	1.81	$199.33 million	$4.14	29.51

Rush Enterprises has higher revenue and earnings than MSC Industrial Direct. Rush Enterprises is trading at a lower price-to-earnings ratio than MSC Industrial Direct, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and target prices for Rush Enterprises and MSC Industrial Direct, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rush Enterprises	1	1	3	0	2.40
MSC Industrial Direct	0	5	3	0	2.38

Rush Enterprises currently has a consensus target price of $46.00, indicating a potential downside of 7.73%. MSC Industrial Direct has a consensus target price of $123.43, indicating a potential upside of 1.03%. Given MSC Industrial Direct’s higher possible upside, analysts plainly believe MSC Industrial Direct is more favorable than Rush Enterprises.

Dividends

Rush Enterprises pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. MSC Industrial Direct pays an annual dividend of $3.48 per share and has a dividend yield of 2.8%. Rush Enterprises pays out 25.3% of its earnings in the form of a dividend. MSC Industrial Direct pays out 84.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Rush Enterprises has increased its dividend for 6 consecutive years and MSC Industrial Direct has increased its dividend for 3 consecutive years.

Risk & Volatility

Rush Enterprises has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, MSC Industrial Direct has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500.

Summary

MSC Industrial Direct beats Rush Enterprises on 9 of the 16 factors compared between the two stocks.

About Rush Enterprises

Rush Enterprises, Inc., through its subsidiaries, operates as an integrated retailer of commercial vehicles and related services in the United States and Canada. The company operates a network of commercial vehicle dealerships under the Rush Truck Centers name. Its Rush Truck Centers primarily sell commercial vehicles manufactured by Peterbilt, International, Hino, Ford, Isuzu, IC Bus, Blue Bird, and Dennis Eagle. The company also offers new and used commercial vehicles, and aftermarket parts, as well as service and repair, financing, and leasing and rental services; and offers property and casualty insurance, including collision and liability insurance on commercial vehicles, cargo insurance, and credit life insurance products. In addition, it provides equipment installation and repair, parts installation, and paint and body repair services; new vehicle pre-delivery inspection, truck modification, and natural gas fuel system installation services, body, chassis upfitting, and component installation services; and vehicle telematics products, as well as sells new and used trailers, and tires for use on commercial vehicles. The company serves regional and national fleets, corporations, local and state governments, and owner-operators. It operates a network of centers located in the states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Missouri, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Utah, Virginia, and Ontario. Rush Enterprises, Inc. was incorporated in 1965 and is headquartered in New Braunfels, Texas.

About MSC Industrial Direct

MSC Industrial Direct Co., Inc., together with its subsidiaries, distributes metalworking and maintenance, repair, and operations (MRO) products and services in the United States, Canada, Mexico, the United Kingdom, and internationally. The company's MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock products, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components, and electrical supplies. It offers stock-keeping units through its catalogs and brochures; e-commerce channels, including its website, mscdirect.com; inventory management solutions; and customer care centers, customer fulfillment centers, regional inventory centers, and warehouses. The company serves individual machine shops, manufacturing companies, and government agencies. MSC Industrial Direct Co., Inc. was founded in 1941 and is headquartered in Melville, New York.