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Grainger (GWW) Gains From Growth Initiatives & E-Retail Demand
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W.W. Grainger, Inc. (GWW - Free Report) is poised well to gain from the strong momentum in the High-Touch Solutions and Endless Assortment segments, the company’s efforts to strengthen customer relationships and investments in growth initiatives. Solid e-commerce sales will also continue to support its top-line performance.
Segments Poised to Deliver Solid 2021 Results
In the High Touch Solutions segment, Grainger witnessed year-on-year revenue improvement in nearly all the end markets in second-quarter 2021, driven by the recovery in the non-pandemic product volume. The Endless Assortment segment also continues to deliver more than 20% top-line growth and improved earnings on strong customer acquisition in the Zoro U.S. and MonotaRO business. This momentum is likely to continue for the remaining period of the current year.
Backed by this performance, Grainger projects 2021 net sales between $12.7 billion and $13 billion. In 2020, the company reported sales of $11.8 billion. For third-quarter 2021, the total daily organic revenue growth is expected in the range of 10% to 11%. The company anticipates earnings per share in the band of $19.00-$20.50, indicating year-over-year growth of 17.5-26.5%.
Growth Initiatives, E-Commerce to Drive Revenues
Grainger 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, the company has invested strategically in its network to ensure optimal capacity, increased automation and standardization in response to the need for the on-demand delivery of products. The company continues to outpace the U.S. maintenance, repair and operating (MRO) market, highlighting the 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 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 in order to improve the sales-force effectiveness.
Grainger is seeing healthy growth in the non-pandemic products sales as the U.S. economy recovers. It expects non-pandemic sales growth of about 22% during the third quarter. The company particularly witnessed a demand recovery in the commercial and heavy manufacturing end-markets. In fact, Grainger is investing in the non-pandemic product inventory and partnering with suppliers to mitigate the supply-related challenges, inbound lead-time challenges and any possible cost increases.
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. Additionally, the pandemic has provided a significant boost to its e-retail sales. 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 lost 1.6% so far this year, compared with the industry’s loss of 21.3%.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Grainger currently carries a Zacks Rank #3 (Hold).
Image: Bigstock
Grainger (GWW) Gains From Growth Initiatives & E-Retail Demand
W.W. Grainger, Inc. (GWW - Free Report) is poised well to gain from the strong momentum in the High-Touch Solutions and Endless Assortment segments, the company’s efforts to strengthen customer relationships and investments in growth initiatives. Solid e-commerce sales will also continue to support its top-line performance.
Segments Poised to Deliver Solid 2021 Results
In the High Touch Solutions segment, Grainger witnessed year-on-year revenue improvement in nearly all the end markets in second-quarter 2021, driven by the recovery in the non-pandemic product volume. The Endless Assortment segment also continues to deliver more than 20% top-line growth and improved earnings on strong customer acquisition in the Zoro U.S. and MonotaRO business. This momentum is likely to continue for the remaining period of the current year.
Backed by this performance, Grainger projects 2021 net sales between $12.7 billion and $13 billion. In 2020, the company reported sales of $11.8 billion. For third-quarter 2021, the total daily organic revenue growth is expected in the range of 10% to 11%. The company anticipates earnings per share in the band of $19.00-$20.50, indicating year-over-year growth of 17.5-26.5%.
Growth Initiatives, E-Commerce to Drive Revenues
Grainger 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, the company has invested strategically in its network to ensure optimal capacity, increased automation and standardization in response to the need for the on-demand delivery of products. The company continues to outpace the U.S. maintenance, repair and operating (MRO) market, highlighting the 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 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 in order to improve the sales-force effectiveness.
Grainger is seeing healthy growth in the non-pandemic products sales as the U.S. economy recovers. It expects non-pandemic sales growth of about 22% during the third quarter. The company particularly witnessed a demand recovery in the commercial and heavy manufacturing end-markets. In fact, Grainger is investing in the non-pandemic product inventory and partnering with suppliers to mitigate the supply-related challenges, inbound lead-time challenges and any possible cost increases.
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. Additionally, the pandemic has provided a significant boost to its e-retail sales. 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 lost 1.6% so far this year, compared with the industry’s loss of 21.3%.
Zacks Rank and Stocks to Consider
Grainger currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Industrial Products sector include Alcoa Corporation (AA - Free Report) , The Manitowoc Company, Inc. (MTW - Free Report) and Deere & Company (DE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alcoa has an estimated earnings growth rate of 573.2% for 2021. The company’s shares have rallied 121.2% so far this year.
Manitowoc has an expected earnings growth rate of 340% for 2021. The stock has appreciated 69.2% year to date.
Deere has a projected earnings growth rate of 117.5% for fiscal 2021. So far this year, the company’s shares have gained 32.2%.