W.W. Grainger, Inc. (GWW - Free Report) has reported earnings per share (EPS) of $9.43 in third-quarter 2022, beating the Zacks Consensus Estimate of $8.85. The bottom line improved 14.1% year over year, aided by margin improvement in the High-Touch Solutions N.A. and Endless Assortment segments, and a strong operating performance.
Grainger’s quarterly revenues rose 6.7% year over year to $4,208 million. The top line, however, missed the Zacks Consensus Estimate of $4,230 million. Daily sales increased 8.4% from the prior-year quarter. We predicted daily sales to increase 8.1% in the quarter.
The High-Touch Solutions N.A. segment’s daily sales were up 8.7% in the quarter from the third quarter of 2022, driven by solid volume growth. Our model predicted year-over-year organic daily sales growth of 6.4% for the quarter.
The Endless Assortment segment’s daily sales were up 6% in the quarter due to increased customer acquisition across the segment and enterprise customer growth at MonotaRO. Our model predicted year-over-year organic daily sales growth of 6.9% for the quarter.
Operational Update
The cost of sales climbed 5.4% year over year to $2,553 million. The gross profit rose 9% year over year to $1,655 million. The gross margin expanded to 39.3% in the quarter compared with the prior-year period’s 38.5%, aided by improved margin performances in both segments.
Selling, general and administrative expenses rose 7.9% year over year to $988 million. Grainger’s operating income in the quarter was up 10.6% year over year to $667 million. The operating margin was 15.9%, a 55-basis-point expansion from the prior-year quarter.
Financial Position
The company had cash and cash equivalents of $601 million at the end of the third quarter of 2023, up from $325 million at the 2022-end. Cash flow from operating activities was $523 million in the third quarter of 2023 compared with $380 million in the last year's quarter.
The long-term debt was $2,260 million as of Sep 30, 2023, compared with $2,284 million as of Dec 31, 2022. Grainger returned $287 million to shareholders through dividends and share buybacks in the reported quarter.
2023 Outlook
Grainger expects net sales between $16.4 billion and $16.6 billion for the current year. The company had earlier expected $16.4-$16.8 billion. It has updated its earnings per share guidance to $36.00-$36.60 from the previously communicated $35.00-$36.75.
Price Performance
In the past year, Grainger’s shares have gained 27.3% compared with the industry’s growth of 8.6%.
Zacks Rank and Stocks to Consider
Grainger currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Applied Industrial Technologies (AIT - Free Report) , Emerson Electric Co. (EMR - Free Report) and Brady (BRC - Free Report) . All these companies currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Applied Industrial has an average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is pegged at $9.13 per share, which indicates year-over-year growth of 2%. Estimates have moved up 2% in the past 60 days. The company’s shares gained 27% in the last year.
Emerson has an average trailing four-quarter earnings surprise of 7.4%. The Zacks Consensus Estimate for EMR’s 2023 earnings is pegged at $4.45 per share. The consensus estimate for 2023 earnings has moved 1% north in the past 60 days. EMR’s shares gained 5.9% in the last year.
The Zacks Consensus Estimate for Brady’s 2023 earnings per share is pegged at $3.62. The consensus estimate for 2023 earnings has moved 13% north in the past 60 days and suggests year-over-year growth of 9.9%. The company has a trailing four-quarter average earnings surprise of 7.2%. Shares of BRC rallied 17.7% in the last year.
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W.W. Grainger, Inc. (GWW - Free Report) has reported earnings per share (EPS) of $9.43 in third-quarter 2022, beating the Zacks Consensus Estimate of $8.85. The bottom line improved 14.1% year over year, aided by margin improvement in the High-Touch Solutions N.A. and Endless Assortment segments, and a strong operating performance.
Grainger’s quarterly revenues rose 6.7% year over year to $4,208 million. The top line, however, missed the Zacks Consensus Estimate of $4,230 million. Daily sales increased 8.4% from the prior-year quarter. We predicted daily sales to increase 8.1% in the quarter.
The High-Touch Solutions N.A. segment’s daily sales were up 8.7% in the quarter from the third quarter of 2022, driven by solid volume growth. Our model predicted year-over-year organic daily sales growth of 6.4% for the quarter.
The Endless Assortment segment’s daily sales were up 6% in the quarter due to increased customer acquisition across the segment and enterprise customer growth at MonotaRO. Our model predicted year-over-year organic daily sales growth of 6.9% for the quarter.
Operational Update
The cost of sales climbed 5.4% year over year to $2,553 million. The gross profit rose 9% year over year to $1,655 million. The gross margin expanded to 39.3% in the quarter compared with the prior-year period’s 38.5%, aided by improved margin performances in both segments.
Selling, general and administrative expenses rose 7.9% year over year to $988 million. Grainger’s operating income in the quarter was up 10.6% year over year to $667 million. The operating margin was 15.9%, a 55-basis-point expansion from the prior-year quarter.
Financial Position
The company had cash and cash equivalents of $601 million at the end of the third quarter of 2023, up from $325 million at the 2022-end. Cash flow from operating activities was $523 million in the third quarter of 2023 compared with $380 million in the last year's quarter.
The long-term debt was $2,260 million as of Sep 30, 2023, compared with $2,284 million as of Dec 31, 2022. Grainger returned $287 million to shareholders through dividends and share buybacks in the reported quarter.
2023 Outlook
Grainger expects net sales between $16.4 billion and $16.6 billion for the current year. The company had earlier expected $16.4-$16.8 billion. It has updated its earnings per share guidance to $36.00-$36.60 from the previously communicated $35.00-$36.75.
Price Performance
In the past year, Grainger’s shares have gained 27.3% compared with the industry’s growth of 8.6%.
Zacks Rank and Stocks to Consider
Grainger currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Applied Industrial Technologies (AIT - Free Report) , Emerson Electric Co. (EMR - Free Report) and Brady (BRC - Free Report) . All these companies currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Applied Industrial has an average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is pegged at $9.13 per share, which indicates year-over-year growth of 2%. Estimates have moved up 2% in the past 60 days. The company’s shares gained 27% in the last year.
Emerson has an average trailing four-quarter earnings surprise of 7.4%. The Zacks Consensus Estimate for EMR’s 2023 earnings is pegged at $4.45 per share. The consensus estimate for 2023 earnings has moved 1% north in the past 60 days. EMR’s shares gained 5.9% in the last year.
The Zacks Consensus Estimate for Brady’s 2023 earnings per share is pegged at $3.62. The consensus estimate for 2023 earnings has moved 13% north in the past 60 days and suggests year-over-year growth of 9.9%. The company has a trailing four-quarter average earnings surprise of 7.2%. Shares of BRC rallied 17.7% in the last year.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
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