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Here's Why You Should Add Grainger (GWW) Stock to Your Portfolio
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W.W. Grainger, Inc. (GWW - Free Report) has been benefiting from volume growth in the High Touch Solutions segment and customer growth in the Endless Assortment segment. This is impressive amid elevated costs and supply shortages. Grainger’s initiatives to manage inventory effectively and invest in marketing are also driving profitability.
Let’s delve deeper and analyze the factors that make this Zacks Rank #2 (Buy) stock a strong investment option at the moment.
Solid Q1 Results: Grainger has reported earnings per share of $9.61 in first-quarter 2023, beating the Zacks Consensus Estimate of $8.57. The bottom line improved 36% year over year, aided by margin improvement in the High-Touch Solutions North America (N.A.) and Endless Assortment segments, and a strong operating performance.
Positive Earnings Surprise History: Grainger’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 9.2%.
Upbeat Growth Projections: The Zacks Consensus Estimate for the company’s 2023 earnings has moved 7% upward over the past 60 days and is pegged at $35.53 per share. It suggests growth of 19.79% from the year-ago reported figure.
The consensus mark for fiscal 2024 earnings is pegged at $37.54 per share, indicating a year-over-year improvement of 5.7%. The Zacks Consensus Estimate has moved up 5% over the past 60 days.
Upbeat Outlook: Backed by the strong first-quarter performance, Grainger expects net sales for the current year between $16.2 billion and $16.8 billion. The company raised its earnings per share guidance to $34.25-$36.75 from the prior mentioned $32-$34.50. The mid-point of the updated guidance indicates 20% growth from the 2022 reported figure. Grainger’s initiatives and supply-chain advantages are likely to aid the company in meeting its guidance.
Strong Segment Performance & Top-Line Growth: In first-quarter 2023, the company reported strong results in both segments. The High-Touch Solutions North America N.A. segment gained from continued volume growth across all geographies and strong price realization. The gross margin was driven by an improved product mix and a favorable price spread, realizing a timing benefit. Daily sales of this segment were up 14.5% from the prior-year quarter’s level. The segment will continue to benefit from pricing actions and strength in commercial, transportation and heavy manufacturing.
The Endless Assortment segment’s daily sales for the first quarter moved up 3.8% from the year-ago quarter. This segment's net sales were aided by core small business growth with new and repeat customers at Zoro U.S. The segment’s revenues also gained from customer acquisition, repeat business and enterprise customer growth at MonotaRO.
Effective Growth Strategies: The company’s margin will continue to gain traction from improved non-pandemic product mix, lower freight costs, pricing actions and its ability to navigate supply-chain challenges. Grainger’s strategic initiatives and efforts to increase market share across the business are driving growth.
Price Performance
In the past year, Grainger’s shares have gained 39.9% compared with the industry’s growth of 12.2%.
Worthington Industries has an average trailing four-quarter earnings surprise of 27.5%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $4.93 per share, up 17.7% in the past 60 days. WOR has gained 27.8% in the past year.
Manitowoc has an average trailing four-quarter earnings surprise of 38.8%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at 85 cents per share, up 63.5% in the past 60 days. MTW’s shares have gained 20.8% in the past year.
The Zacks Consensus Estimate for Pentair’s 2023 earnings per share is pegged at $3.66, up 3% in the past 60 days. It has a trailing four-quarter average earnings surprise of 7.2%. PNR gained 14.9% in the last year.
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Here's Why You Should Add Grainger (GWW) Stock to Your Portfolio
W.W. Grainger, Inc. (GWW - Free Report) has been benefiting from volume growth in the High Touch Solutions segment and customer growth in the Endless Assortment segment. This is impressive amid elevated costs and supply shortages. Grainger’s initiatives to manage inventory effectively and invest in marketing are also driving profitability.
Let’s delve deeper and analyze the factors that make this Zacks Rank #2 (Buy) stock a strong investment option at the moment.
Solid Q1 Results: Grainger has reported earnings per share of $9.61 in first-quarter 2023, beating the Zacks Consensus Estimate of $8.57. The bottom line improved 36% year over year, aided by margin improvement in the High-Touch Solutions North America (N.A.) and Endless Assortment segments, and a strong operating performance.
Positive Earnings Surprise History: Grainger’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 9.2%.
Upbeat Growth Projections: The Zacks Consensus Estimate for the company’s 2023 earnings has moved 7% upward over the past 60 days and is pegged at $35.53 per share. It suggests growth of 19.79% from the year-ago reported figure.
The consensus mark for fiscal 2024 earnings is pegged at $37.54 per share, indicating a year-over-year improvement of 5.7%. The Zacks Consensus Estimate has moved up 5% over the past 60 days.
Upbeat Outlook: Backed by the strong first-quarter performance, Grainger expects net sales for the current year between $16.2 billion and $16.8 billion. The company raised its earnings per share guidance to $34.25-$36.75 from the prior mentioned $32-$34.50. The mid-point of the updated guidance indicates 20% growth from the 2022 reported figure. Grainger’s initiatives and supply-chain advantages are likely to aid the company in meeting its guidance.
Strong Segment Performance & Top-Line Growth: In first-quarter 2023, the company reported strong results in both segments. The High-Touch Solutions North America N.A. segment gained from continued volume growth across all geographies and strong price realization. The gross margin was driven by an improved product mix and a favorable price spread, realizing a timing benefit. Daily sales of this segment were up 14.5% from the prior-year quarter’s level. The segment will continue to benefit from pricing actions and strength in commercial, transportation and heavy manufacturing.
The Endless Assortment segment’s daily sales for the first quarter moved up 3.8% from the year-ago quarter. This segment's net sales were aided by core small business growth with new and repeat customers at Zoro U.S. The segment’s revenues also gained from customer acquisition, repeat business and enterprise customer growth at MonotaRO.
Effective Growth Strategies: The company’s margin will continue to gain traction from improved non-pandemic product mix, lower freight costs, pricing actions and its ability to navigate supply-chain challenges. Grainger’s strategic initiatives and efforts to increase market share across the business are driving growth.
Price Performance
In the past year, Grainger’s shares have gained 39.9% compared with the industry’s growth of 12.2%.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. (WOR - Free Report) , The Manitowoc Company, Inc. (MTW - Free Report) , and Pentair plc (PNR - Free Report) . WOR and MTW flaunt a Zacks Rank #1 (Strong Buy) at present, and PNR has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Worthington Industries has an average trailing four-quarter earnings surprise of 27.5%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $4.93 per share, up 17.7% in the past 60 days. WOR has gained 27.8% in the past year.
Manitowoc has an average trailing four-quarter earnings surprise of 38.8%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at 85 cents per share, up 63.5% in the past 60 days. MTW’s shares have gained 20.8% in the past year.
The Zacks Consensus Estimate for Pentair’s 2023 earnings per share is pegged at $3.66, up 3% in the past 60 days. It has a trailing four-quarter average earnings surprise of 7.2%. PNR gained 14.9% in the last year.