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Grainger (GWW) Earnings & Sales Beat Estimates in Q1, Up Y/Y

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W.W. Grainger, Inc. (GWW - Free Report) reported earnings per share (EPS) of $7.07 in first-quarter 2022, beating the Zacks Consensus Estimate of $6.16. The bottom line improved 58% year over year, driven by strong demand in both the High-Touch Solutions N.A. and Endless Assortment segments and higher operating earnings.

Grainger’s quarterly revenues rose 18% year over year to $3,647 million. The top line surpassed the Zacks Consensus Estimate of $3,518 million.

Daily sales increased 16.4% from the prior-year quarter’s levels. The uptick was driven by a strong performance in both the High-Touch Solutions North America (N.A.) and Endless Assortment segments.

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

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

Operational Update

Cost of sales climbed 13.7% year over year to $2,264 million. The gross profit rose 26.5% year over year to $1,383 million. The gross margin expanded to 37.9% in the quarter compared with the prior-year period’s 35.4%.

Grainger’s operating income in the quarter was up 49% year on year to $534 million. The operating margin came in at 14.6%, a 300 basis point expansion from the prior-year quarter.

Financial Position

The company had cash and cash equivalents of $364 million at the end of the first quarter of 2022, up from $241 million at 2021-end. Cash flow from operating activities was $343 million in the first quarter of 2022 compared with $294 million in the last-year’s quarter.

Long-term debt was $2,338 million as of Mar 31, 2022, compared with $2,362 million as of Dec 31, 2021. Grainger returned $163 million to shareholders through dividends and share buybacks in the first quarter.

2022 Outlook

Backed by the strong first-quarter performance, Grainger now expects net sales for the current year to be between $14.5 billion and $14.9 billion, up from its prior stated range of $14.1 billion to $14.5 billion. The company raised its earnings per share guidance to the band of $25.00-$27.00 from its previous expectation of $23.50-$25.50.

Price Performance

Zacks Investment Research
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In the past year, Grainger’s shares have gained 17.4% against the industry’s decline of 53.9%.

Zacks Rank and Stocks to Consider

Grainger currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Industrial Products sector are Alcoa (AA - Free Report) , Titan International (TWI - Free Report) and Packaging Corporation of America (PKG - Free Report) . All of these stocks flaunt a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alcoa has a projected earnings growth rate of 107% for the current year. The Zacks Consensus Estimate for 2022 earnings has moved north by 76% in the past 60 days.

Alcoa delivered a trailing four-quarter earnings surprise of 17.4%, on average. Alcoa’s shares have soared 92% in the past year.

Titan International has an estimated earnings growth rate of 36.5% for fiscal 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 20%.

Titan International pulled off a trailing four-quarter earnings surprise of 47.6%, on average. The company’s shares have appreciated 27% in a year’s time.

Packaging Corporation has an expected earnings growth rate of 16% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 4% in the past 60 days.

Packaging Corporation has a trailing four-quarter earnings surprise of 19.6%, on average. PKG’s shares have appreciated 11% in a year’s time.