MSC Industrial Direct (MSM) is trading lower today after its July sales declined by 12.6%.

Sales were also down 14% for the first two months of the company’s fiscal fourth quarter. Sales of janitorial products have continued to rise, but significant weakness in the aerospace, automotive and heavy equipment industries continues to weigh heavily on results.

I believe that the earnings per share (EPS) estimate for the August 2020 fiscal year is now likely to be close to $4.40 a share, rather than the currently expected $4.60. I also anticipate that we will see EPS decline to $4.20 in the August 2021 fiscal year, as the company faces difficult comparisons in the first half the new fiscal year. I am therefore lowering my target price on MSM to $72, while my buy under price remains $60.