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Grainger (GWW) Hits 52-Week High: What's Driving the Stock?
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Shares of W.W. Grainger, Inc.(GWW - Free Report) scaled a fresh 52-week high of $366.25 during trading session on Aug 27, before retracting a bit to close at $362.47. Forecast-topping second-quarter 2020 results, investments in growth initiatives, rising e-commerce sales and focus on strengthening the customer base have contributed to this rally.
The company has a market cap of $19.37 billion. It has an expected long-term earnings per share growth rate of 9.6%.
Notably, the stock has appreciated 32.6% over the past year, outperforming the industry’s gain of 15.8%.
Earnings & Sales Beat Estimates in Q2
Grainger reported second-quarter adjusted earnings per share (EPS) of $3.75, which beat the Zacks Consensus Estimate of $3.48. Revenues of $2.84 billion also surpassed the Zacks Consensus Estimate of $2.75 billion.
Driving Factors
The company accomplished the goal of remerchandising a record $1.2 billion of products in the United States and is on track to complete another $1.6 billion this year. Aided by its investments in growth initiatives, Grainger expanded the U.S maintenance, repair and operating (MRO) market by 150-200 basis points (bps) in 2019. So far this year, the company has consistently outpaced the U.S MRO market.
In second-quarter 2020, Grainger outgrew the U.S MRO market by around 100 bps, highlighting the continued traction of its growth initiatives. Grainger will continue its efforts to strengthen relationships with both large- and mid-sized customers to improve sales-force effectiveness. It continues to re-engage lapsed customers and acquire new ones.
The company has witnessed a surge of COVID-19 pandemic-related product sales, such as personal protective equipment (PPE) and safety products, owing to higher customer demand. Grainger expects increased levels of safety and cleaning product sales to large healthcare, government and critical manufacturing customers in the near term. Further, the pandemic has provided a boost to Grainger’s e-commerce sales. The company is focused on improving the end-to-end customer experience by making investments in its e-commerce and digital capabilities, and executing improvement initiatives within the supply chain. Furthermore, it has undertaken several cost-control measures in the wake of the uncertainty related to the pandemic.
Grainger’s Canada business is an attractive market and is anticipated to deliver double-digit operating margin growth over the next five years. The company has been focused on reducing its cost structure in the Canada operations to drive growth, and is focused on making incremental investments in marketing and merchandising. It expects to return to growth in the business in the second half of the current year, and anticipates the business to be sustainable and profitable.
Solid Estimate Revisions
The company’s earnings estimate for the current year is pegged at $15.80 per share and has moved 6% north over the past 60 days. Eight analysts have increased their earnings estimates for the current year, while one has revised the estimates downward during the same time frame.
Zacks Rank & Stocks to Consider
Grainger currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. (SLGN - Free Report) , IIVI Incorporated and SiteOne Landscape Supply, Inc. (SITE - Free Report) . While Silgan and IIVI sport a Zacks Rank #1 (Strong Buy), SiteOne carries a Zacks Rank of 2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Silgan has a projected earnings growth rate of 28.7% for 2020. The company’s shares have gained 14.7% so far this year.
IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 37% year to date.
SiteOne Landscape has an expected earnings growth rate of 15.4% for the current year. The stock has appreciated 41% in the year so far.
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Grainger (GWW) Hits 52-Week High: What's Driving the Stock?
Shares of W.W. Grainger, Inc.(GWW - Free Report) scaled a fresh 52-week high of $366.25 during trading session on Aug 27, before retracting a bit to close at $362.47. Forecast-topping second-quarter 2020 results, investments in growth initiatives, rising e-commerce sales and focus on strengthening the customer base have contributed to this rally.
The company has a market cap of $19.37 billion. It has an expected long-term earnings per share growth rate of 9.6%.
Notably, the stock has appreciated 32.6% over the past year, outperforming the industry’s gain of 15.8%.
Earnings & Sales Beat Estimates in Q2
Grainger reported second-quarter adjusted earnings per share (EPS) of $3.75, which beat the Zacks Consensus Estimate of $3.48. Revenues of $2.84 billion also surpassed the Zacks Consensus Estimate of $2.75 billion.
Driving Factors
The company accomplished the goal of remerchandising a record $1.2 billion of products in the United States and is on track to complete another $1.6 billion this year. Aided by its investments in growth initiatives, Grainger expanded the U.S maintenance, repair and operating (MRO) market by 150-200 basis points (bps) in 2019. So far this year, the company has consistently outpaced the U.S MRO market.
In second-quarter 2020, Grainger outgrew the U.S MRO market by around 100 bps, highlighting the continued traction of its growth initiatives. Grainger will continue its efforts to strengthen relationships with both large- and mid-sized customers to improve sales-force effectiveness. It continues to re-engage lapsed customers and acquire new ones.
The company has witnessed a surge of COVID-19 pandemic-related product sales, such as personal protective equipment (PPE) and safety products, owing to higher customer demand. Grainger expects increased levels of safety and cleaning product sales to large healthcare, government and critical manufacturing customers in the near term. Further, the pandemic has provided a boost to Grainger’s e-commerce sales. The company is focused on improving the end-to-end customer experience by making investments in its e-commerce and digital capabilities, and executing improvement initiatives within the supply chain. Furthermore, it has undertaken several cost-control measures in the wake of the uncertainty related to the pandemic.
Grainger’s Canada business is an attractive market and is anticipated to deliver double-digit operating margin growth over the next five years. The company has been focused on reducing its cost structure in the Canada operations to drive growth, and is focused on making incremental investments in marketing and merchandising. It expects to return to growth in the business in the second half of the current year, and anticipates the business to be sustainable and profitable.
Solid Estimate Revisions
The company’s earnings estimate for the current year is pegged at $15.80 per share and has moved 6% north over the past 60 days. Eight analysts have increased their earnings estimates for the current year, while one has revised the estimates downward during the same time frame.
Zacks Rank & Stocks to Consider
Grainger currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. (SLGN - Free Report) , IIVI Incorporated and SiteOne Landscape Supply, Inc. (SITE - Free Report) . While Silgan and IIVI sport a Zacks Rank #1 (Strong Buy), SiteOne carries a Zacks Rank of 2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Silgan has a projected earnings growth rate of 28.7% for 2020. The company’s shares have gained 14.7% so far this year.
IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 37% year to date.
SiteOne Landscape has an expected earnings growth rate of 15.4% for the current year. The stock has appreciated 41% in the year so far.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
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