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Here's Why You Should Add Grainger (GWW) to Your Portfolio
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W.W. Grainger, Inc. (GWW - Free Report) is benefiting from its efforts to strengthen customer relationships, investments in growth initiatives, pandemic induced sales and the e-commerce boom.
Grainger currently carries a Zacks Rank #2 (Buy). It has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold), offer the best investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has an estimated long-term earnings growth rate of 13.5%.
Positive Earnings Surprise History
Grainger has a trailing four-quarter earnings surprise of 4.43%, on average.
Solid Growth Projections
The company’s current-year earnings estimate is pegged at $19.58 per share, indicating year-over-year growth of 21%. The same for 2022 stands at $22.40, suggesting year-on-year improvement of 14.40%. The Zacks Consensus Estimate for 2021 and 2022 have moved up 7.7% and 5.8% in the past 30 days, respectively.
Return on Equity (ROE)
Grainger’s trailing 12-month ROE supports its growth potential. The company’s ROE of 40.6% higher than the industry’s average ROE of 14.7%, reflecting that it is more efficient in utilizing shareholders’ funds.
Upbeat Guidance
In the High Touch Solutions (N.A.) segment, Grainger witnessed sequential revenue improvement in nearly all end markets in first-quarter 2021, recovery in non-pandemic product volume, and stabilizing gross margins. The Endless Assortment segment also continues to deliver more than 20% top-line growth and improved earnings.
Backed by this performance, Grainger projects net sales in 2021 between $12.7 billion and $13 billion. In 2020, the company had reported sales of $11.8 billion. In 2021, total company daily revenue growth is expected in the range of 8.5% to 11.0%. The company anticipates earnings per share in the band of $19.00-$20.50, indicating year-over-year growth of 17.5% to 26.5%.
Growth Drivers in Place
The company accomplished the goal of remerchandising a record $1.2 billion of products in the United States in 2019 and completed another $1.6 billion in 2020. Over the past decade, Grainger has invested strategically in its network to ensure optimal capacity, increased automation, and standardization in response to the need for on-demand delivery of products. The company continues to outpace the U.S. maintenance, repair and operating (MRO) market, highlighting continued traction of its growth initiatives and pandemic-related sales.
It is focused on driving 300-400 basis points of outgrowth compared with the market by focusing on the strategic activities such as building advantaged MRO solutions, delivering unparalleled customer service, and offering differentiated sales and services. Grainger will continue its efforts to strengthen relationships with both large and mid-sized customers to improve sales force effectiveness.
Grainger has witnessed a surge of COVID-19 pandemic-related product sales, such as personal protective equipment (PPE) and safety products on higher customer demand. Management 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 significant boost to its e-retail sales. The company is focused on improving the end-to-end customer experience by making investments in e-commerce and digital capabilities, and executing improvement initiatives within the supply chain. Notably, in 2020, 65% of Grainger’s revenues stemmed from online channels and the company was ranked as the 11th largest e-retailer in North America, according to Internet Retailer.
Share Price Performance
The stock has gained 20.5% over the past three months against the industry’s decline of 2.7%.
Other Stocks to Consider
Some other top-ranked stocks in the Industrial Products sector include AGCO Corporation (AGCO - Free Report) , Avery Dennison Corporation (AVY - Free Report) and Caterpillar Inc. (CAT - Free Report) . All of these stocks currently carry a Zacks Rank of 2.
AGCO Corporation has a projected earnings growth rate of 54.6% for the current year. Shares of the company have gone up 13% over the past three months.
Avery Dennison has an estimated earnings growth rate of 20.8% for 2021. The company’s shares have rallied 25% in the past three months.
Caterpillar has an expected earnings growth rate of 45.6% for the ongoing year. Over the past three months, the stock has gained 10%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Here's Why You Should Add Grainger (GWW) to Your Portfolio
W.W. Grainger, Inc. (GWW - Free Report) is benefiting from its efforts to strengthen customer relationships, investments in growth initiatives, pandemic induced sales and the e-commerce boom.
Grainger currently carries a Zacks Rank #2 (Buy). It has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold), offer the best investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has an estimated long-term earnings growth rate of 13.5%.
Positive Earnings Surprise History
Grainger has a trailing four-quarter earnings surprise of 4.43%, on average.
Solid Growth Projections
The company’s current-year earnings estimate is pegged at $19.58 per share, indicating year-over-year growth of 21%. The same for 2022 stands at $22.40, suggesting year-on-year improvement of 14.40%. The Zacks Consensus Estimate for 2021 and 2022 have moved up 7.7% and 5.8% in the past 30 days, respectively.
Return on Equity (ROE)
Grainger’s trailing 12-month ROE supports its growth potential. The company’s ROE of 40.6% higher than the industry’s average ROE of 14.7%, reflecting that it is more efficient in utilizing shareholders’ funds.
Upbeat Guidance
In the High Touch Solutions (N.A.) segment, Grainger witnessed sequential revenue improvement in nearly all end markets in first-quarter 2021, recovery in non-pandemic product volume, and stabilizing gross margins. The Endless Assortment segment also continues to deliver more than 20% top-line growth and improved earnings.
Backed by this performance, Grainger projects net sales in 2021 between $12.7 billion and $13 billion. In 2020, the company had reported sales of $11.8 billion. In 2021, total company daily revenue growth is expected in the range of 8.5% to 11.0%. The company anticipates earnings per share in the band of $19.00-$20.50, indicating year-over-year growth of 17.5% to 26.5%.
Growth Drivers in Place
The company accomplished the goal of remerchandising a record $1.2 billion of products in the United States in 2019 and completed another $1.6 billion in 2020. Over the past decade, Grainger has invested strategically in its network to ensure optimal capacity, increased automation, and standardization in response to the need for on-demand delivery of products. The company continues to outpace the U.S. maintenance, repair and operating (MRO) market, highlighting continued traction of its growth initiatives and pandemic-related sales.
It is focused on driving 300-400 basis points of outgrowth compared with the market by focusing on the strategic activities such as building advantaged MRO solutions, delivering unparalleled customer service, and offering differentiated sales and services. Grainger will continue its efforts to strengthen relationships with both large and mid-sized customers to improve sales force effectiveness.
Grainger has witnessed a surge of COVID-19 pandemic-related product sales, such as personal protective equipment (PPE) and safety products on higher customer demand. Management 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 significant boost to its e-retail sales. The company is focused on improving the end-to-end customer experience by making investments in e-commerce and digital capabilities, and executing improvement initiatives within the supply chain. Notably, in 2020, 65% of Grainger’s revenues stemmed from online channels and the company was ranked as the 11th largest e-retailer in North America, according to Internet Retailer.
Share Price Performance
The stock has gained 20.5% over the past three months against the industry’s decline of 2.7%.
Other Stocks to Consider
Some other top-ranked stocks in the Industrial Products sector include AGCO Corporation (AGCO - Free Report) , Avery Dennison Corporation (AVY - Free Report) and Caterpillar Inc. (CAT - Free Report) . All of these stocks currently carry a Zacks Rank of 2.
AGCO Corporation has a projected earnings growth rate of 54.6% for the current year. Shares of the company have gone up 13% over the past three months.
Avery Dennison has an estimated earnings growth rate of 20.8% for 2021. The company’s shares have rallied 25% in the past three months.
Caterpillar has an expected earnings growth rate of 45.6% for the ongoing year. Over the past three months, the stock has gained 10%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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