Shares of
W.W. Grainger, Inc. (
GWW - Free Report) have gained around 22% over the last three months. The company has also outperformed its
industry's growth of roughly 9%.
Grainger has a market cap of roughly $15.7 billion and average volume of shares traded in the last three months is around 1.01 million. The company has expected long-term earnings per share growth of 9.7%.
Let's take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
Driving Factors
Forecast-topping earnings performance in the last reported quarter and upbeat outlook for 2018 have contributed to Grainger' rally.
The company’s fourth-quarter 2017 adjusted earnings per share of $2.94 came in higher than the prior-year figure of $2.45 by 20%. Further, earnings beat the Zacks Consensus Estimate of $2.18 by a wide margin of 35%. The company witnessed strong volumes in its U.S. business, driven by strategic pricing initiatives as well as an improving demand environment. Grainger reported revenues of $2,632 million, up 6.5% from the prior-year quarter figure of $2,471 million, driven by an increase of 11 percentage point (pp) from volume growth. The figure also surpassed the Zacks Consensus Estimate of $2,568 million.
Grainger raised fiscal 2018 earnings per share guidance range to $12.95-$14.15 from the previous range of $10.60-$11.80. The increase in the guidance factors in a 50 cents contribution from the better-than-expected fiscal 2017 operating performance, benefit from lower corporate tax rate under U.S. tax legislation and incremental share buybacks funded by the benefits of the tax legislation.
The company anticipates higher sales and earnings as well as a higher operating margin in fiscal 2018. The mid-point of the EPS guidance reflects an 18% growth compared with the prior year. The company maintains sales growth guidance in the range of 3-7% for the fiscal.
Grainger’s pricing initiatives have been driving growth. The company will continue its pricing strategies in the United States through the fiscal. It expects solid volume growth due to these actions and an improved demand environment.
W.W. Grainger, Inc. Price and Consensus
Other Stocks to Consider
Mobile Mini has an expected long-term earnings growth rate of 14%. Its shares have rallied roughly 34% over the past three months.
Milacron Holdings has an expected long-term earnings growth rate of 5.4%. Its shares have gained 17% over the past three months.
Rexnord Corporation has an expected long-term earnings growth rate of 12.4%. Its shares have rallied around 22% over the past three months.
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From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
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