We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Grainger (GWW) Hits 52-Week Low: What's Dragging it Down?
Read MoreHide Full Article
Shares of W.W. Grainger, Inc. (GWW - Free Report) touched a 52-week low of $158.35 on Aug 21, recovering a little to eventually close the day at $158.41. The stock has lost nearly 31.8% year to date.
Grainger has a market cap of roughly $9.14 billion. Average volume of shares traded in the last three months is around 1.02 million.
In fact, the provider of MRO solutions has underperformed the industry with respect to price performance in the past one year. While this Zacks Rank #3 (Hold) stock lost around 4.4%, the industry recorded growth of 9.1%.
Let’s delve deeper to find out what’s leading to this bearish run.
What’s Hurting Grainger?
Shares of Grainger have been falling and lost around 2.4% since it reported second-quarter 2017 results on Jul 19. The company’s second-quarter 2017 adjusted earnings per share of $2.74 came in 5% lower than the prior-year figure of $2.89. Further, it reiterated 2017 adjusted earnings per share guidance range of $10.00-$11.30 and sales growth in the range of 1-4%. In the second half of 2017, Grainger anticipates 6-8% volume growth. Its second-half 2017 performance will likely improve backed by positive response to the pricing actions and marketing activities which will drive simplification of pricing structure.
However, from 2017 to 2019, Grainger expects inflationary expenses of approximately $80-$85 million, which is about 2% of the base annually. These actions will result in significant operating expense leverage which will hurt the company’s margin performance.
Even though Grainger remains focused on improving gross margins and reducing cost structure in Canada, the segment continues to be challenged due to higher expenses. Further, its oil and gas, and energy exposure in Canada is very high. Consequently, fluctuation in oil prices will hamper the segment’s results.
Owens-Illinois has an expected long-term growth of 9.65%.
Zacks' 10-Minute Stock-Picking Secret
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month.
Image: Bigstock
Grainger (GWW) Hits 52-Week Low: What's Dragging it Down?
Shares of W.W. Grainger, Inc. (GWW - Free Report) touched a 52-week low of $158.35 on Aug 21, recovering a little to eventually close the day at $158.41. The stock has lost nearly 31.8% year to date.
Grainger has a market cap of roughly $9.14 billion. Average volume of shares traded in the last three months is around 1.02 million.
In fact, the provider of MRO solutions has underperformed the industry with respect to price performance in the past one year. While this Zacks Rank #3 (Hold) stock lost around 4.4%, the industry recorded growth of 9.1%.
Let’s delve deeper to find out what’s leading to this bearish run.
What’s Hurting Grainger?
Shares of Grainger have been falling and lost around 2.4% since it reported second-quarter 2017 results on Jul 19. The company’s second-quarter 2017 adjusted earnings per share of $2.74 came in 5% lower than the prior-year figure of $2.89. Further, it reiterated 2017 adjusted earnings per share guidance range of $10.00-$11.30 and sales growth in the range of 1-4%. In the second half of 2017, Grainger anticipates 6-8% volume growth. Its second-half 2017 performance will likely improve backed by positive response to the pricing actions and marketing activities which will drive simplification of pricing structure.
However, from 2017 to 2019, Grainger expects inflationary expenses of approximately $80-$85 million, which is about 2% of the base annually. These actions will result in significant operating expense leverage which will hurt the company’s margin performance.
W.W. Grainger, Inc. Price
W.W. Grainger, Inc. Price | W.W. Grainger, Inc. Quote
Even though Grainger remains focused on improving gross margins and reducing cost structure in Canada, the segment continues to be challenged due to higher expenses. Further, its oil and gas, and energy exposure in Canada is very high. Consequently, fluctuation in oil prices will hamper the segment’s results.
Stock to Consider
Some better-ranked stocks in the same sector include Terex Corporation (TEX - Free Report) , AGCO Corporation (AGCO - Free Report) and Owens-Illinois Inc. (OI - Free Report) . All the three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Terex has an expected long-term growth of 19.67%.
AGCO has expected long-term growth of 13.51%.
Owens-Illinois has an expected long-term growth of 9.65%.
Zacks' 10-Minute Stock-Picking Secret
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month.
Learn the secret >>