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Bull of the Day: WW Grainger (GWW)

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W.W. Grainger, Inc. (GWW - Free Report) hit it out of the park in the first quarter. This Zacks Rank #1 (Strong Buy) recently raised full year sales and EPS guidance.

Grainger is the leading North American broad line supplier of maintenance, repair and operating products (MRO), with operations also in Europe, Asia and Latin America.

Big Beat in the First Quarter

On Apr 19, Grainger reported its first quarter results and blew by the Zacks Consensus Estimate by 22%.

Earnings were $4.18 versus the Zacks Consensus of $3.41.

It was the fourth earnings beat in a row.

Sales rose 9% to $2.8 billion compared to $2.5 billion in the first quarter of 2017 led by increased volume with both large and medium customers in the U.S. business. It's yet another sign that the U.S. economy is strong.

It saw improved performance in Canada but Canada is still in the early stages of a turnaround.

Canada and the U.S. represented 79% of the sales in the quarter. U.S. sales rose 8% while Canada declined 2% year-over-year.

It's other business segments saw sales up 18%, with 12% due to volume and pricing and 6% from foreign currency exchange. It saw improved performance in its international business.

Raised 2018 Guidance

Given the strong first quarter, the company raised its 2018 sales and EPS guidance.

It now sees sales growth between 5% and 8%, up from its previous guidance of 3 to 7%.

Earnings per shares are forecast between $14.30 and $15.30, up from its prior guidance of $12.95 to $14.15.

As a result, the analysts are raising their full year estimates. 6 estimates have been raised for 2018 since the report.

That has pushed the 2018 Zacks Consensus Estimate up to $14.69 from $14.23 which is earnings growth of 28.2% over 2017.

But the analysts are also bullish about 2019. 6 estimates have been raised for next year as well.

The 2019 Zacks Consensus has jumped to $16.59 from $16.14 in the last month. That's another 13% earnings growth.

Raised the Dividend Again

On Apr 25, Grainger announced that it was raising its quarterly dividend by 6.3% to $1.36.

It's payable on June 1 to shareholders of record as of May 14, 2018.

This is the 47th consecutive year that the company has raised its dividend.

That's an incredible streak that few companies can match.

The dividend is currently yielding 1.8%.

Shares at 5-Year Highs

2017 was the year to buy the stock as it hit new lows.

But since it started beating the Zacks Consensus, and sales have turned, the shares have surged too. They're up 43% over the last year, including 17% year-to-date in 2018.

Despite the new highs, the shares still have attractive valuations. They trade with a forward P/E of 18.9.

For investors looking for a way to play the strong domestic manufacturing economy, Grainger is one to keep on the short list.

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