MRC Global Exhibits Strong Prospects Amid Persisting Headwinds

MRC Global Inc. MRC is benefiting from solid momentum across the gas utility sector, driven by new home construction in some U.S. states and lower exposure to energy price volatility. Revenues from this sector increased 3% year over year to $273 million in the first quarter of 2025. Also, despite the ongoing softness across the majority of businesses, a strong pipeline of refining, chemical and mining customer projects bodes well for it. In the quarters ahead, the company is expected to benefit from increased customer activity levels related to maintenance, repair and operations (MRO) activities. An increase in demand for natural gas and solid momentum in the data center business bode well for the company. For 2025, MRC Global expects its revenues to increase in low to high single digits year over year.

MRC is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. In the first quarter of 2025, the company bought back shares worth $6 million. In 2024, MRC Global’s dividend payments totaled $23 million. It also repurchased shares worth $365 million in the same period. In January 2025, the company’s board of directors authorized a share repurchase program. The buyback program, which will remain valid till Jan. 2, 2028, authorizes MRC Global to repurchase up to $125 million worth of shares.

Strong free cash flow generation capacity should also aid MRC Global to continue rewarding its shareholders in the quarters ahead. In the first three months of 2025, the company generated free cash flow of $9 million. Also, the reduction of debts remains a priority for MRC. In the first three months of 2025, it repaid $184 million in borrowings under revolving credit facilities. In 2024, it repaid $449 million in borrowings under revolving credit facilities. Also, MRC Global’s focus on reducing its leverage ratio is evident as the metric was 1.7x at the end of the first quarter.

MRC Price Performance

In the past year, shares of this Zacks Rank #3 (Hold) company have gained 2.7% against the industry’s 2.2% decline.

Headwinds Plaguing MRC

However, the company has been facing headwinds in the Production & Transmission Infrastructure (PTI) and Downstream, Industrial and Energy Transition (DIET) sectors. Completion of large projects and softness in upstream activity due to lower oil prices are impacting the PTI sector. Project timing delays and reduced international activity are weighing on the DIET sector.

Despite improvement, potential conflicts in Southeast Asia and the Middle East may constrain the global supply chain and impact the availability of parts, particularly valves, regulators and other components. Labor constraints, arising from increased competition among companies to attract and retain employees, are also worrisome for the company in the quarters ahead.

Stocks to Consider

Some better-ranked companies are discussed below:

Life360, Inc. LIF currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LIF delivered a trailing four-quarter average earnings surprise of 425%. In the past 60 days, the Zacks Consensus Estimate for Life360’s 2025 earnings has increased 20%.

Alarm.com Holdings, Inc. ALRM presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 15.7%.

The Zacks Consensus Estimate for ALRM’s 2025 earnings has increased 0.9% in the past 60 days.

Broadwind, Inc. BWEN presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 61.1%.

In the past 60 days, the consensus estimate for BWEN’s 2025 earnings has increased 14.3%.

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This article originally published on Zacks Investment Research (zacks.com).

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