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Is a Beat in the Cards for Grainger (GWW) This Earnings Season?

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W.W. Grainger, Inc. (GWW - Free Report) is scheduled to report second-quarter 2021 results on Jul 30, before the opening bell.

Q2 Estimates

The Zacks Consensus Estimate for second-quarter revenues is pegged at $3.22 billion, indicating growth of 13.6% from the year-ago period. The Consensus Estimate for earnings per share stands at $4.58, suggesting an improvement of 22.1% from the prior-year quarter. The estimate for earnings has gone up 0.2% over the past 30 days.

Q1 Results

In the last reported quarter, Grainger’s earnings and revenues increased year over year. Both the bottom-and top-line figures beat the respective Zacks Consensus Estimate. The company has a trailing four-quarter average earnings surprise of 4.4%.

W.W. Grainger, Inc. Price and EPS Surprise

W.W. Grainger, Inc. Price and EPS Surprise

W.W. Grainger, Inc. price-eps-surprise | W.W. Grainger, Inc. Quote

What the Zacks Model Indicates

Our proven model predicts an earnings beat for Grainger this season. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat.

Earnings ESP: Grainger has an Earnings ESP of +0.71%.

Zacks Rank: The company currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Note

Grainger has been seeing a surge in sales of personal protective equipment (PPE) and safety products on higher customer demand in response to the coronavirus pandemic. This rising demand is primarily stemming from customers on the front-lines of the pandemic, including hospitals, healthcare providers, governments, first responders and critical manufactures. It has been witnessing increased levels of safety and cleaning product sales to large healthcare, government and critical manufacturing customers, which are anticipated to have favored the second-quarter performance. Further, e-commerce sales have been on the rise as customers are staying indoors amid the health crisis. This is likely to have contributed to the to-be-reported quarter’s performance. Demand recovery for non-pandemic products is also likely to get reflected in the bottom-line results.

The COVID-19 pandemic has prompted a shift in demand toward lower-margin products. In addition, higher operating costs in response to the pandemic and related activities might have impacted Grainger’s operating margin during the April-June period. Nevertheless, its ongoing cost-control measures undertaken in the wake of the ongoing uncertainty is expected to have offset some of the impact. In fact, while Grainger’s Canada business has been hurt by the pandemic-induced weakness, its focus on reducing cost structure in the operations is likely to have aided margin growth in this business during the second quarter.

Price Performance

Shares of the company have gained 39.1% in a year’s time, outperforming the industry’s growth of 22.1%.

Zacks Investment Research
Image Source: Zacks Investment Research

Other Stocks Poised to Beat Earnings Estimates

Here are some other Industrial Products stocks, which you may consider as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases.

Terex Corporation (TEX - Free Report) has an Earnings ESP of +15.41% and flaunts a Zacks Rank of 1, at present.

Welbilt, Inc. (WBT - Free Report) has an Earnings ESP of +44.68% and carries a Zacks Rank #2, currently.

Reliance Steel & Aluminum Co. (RS - Free Report) , currently a Zacks #2 Ranked stock, has an Earnings ESP of +18.52 %.