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W.W. Grainger, Inc. (GWW - Free Report) has reported adjusted earnings per share (EPS) of $8.33 in fourth-quarter 2023, beating the Zacks Consensus Estimate of $8.03. The bottom line improved 16.7% year over year, aided by volume growth in the High-Touch Solutions N.A. and Endless Assortment segments.
Including one-time items, EPS was $7.89 in the quarter under review compared with $7.54 in the prior-year quarter.
Grainger’s quarterly sales rose 5.1% year over year to $3.99 billion. However, the top line missed the Zacks Consensus Estimate of $4.04 billion. Daily sales increased 5.1% from the prior-year quarter. We predicted daily sales to increase 6.4%.
The High-Touch Solutions N.A. segment’s daily sales rose 4.7% in the quarter from the fourth quarter of 2022, driven by solid volume growth. Our model predicted year-over-year organic daily sales growth of 7.1%.
The Endless Assortment segment’s daily sales grew 6% in the quarter due to increased customer acquisition across the segment and enterprise customer growth at MonotaRO. The upside was partially offset by declining sales to non-core, consumer-like customers at Zoro. Our model predicted year-over-year organic daily sales growth of 3.3% for the quarter.
W.W. Grainger, Inc. Price, Consensus and EPS Surprise
The cost of sales climbed 6% year over year to $2.43 billion. The gross profit rose 3.8% year over year to $1.56 billion. The gross margin came in at 39.1% in the quarter compared with the prior-year period’s 39.6%.
Selling, general and administrative expenses rose 4.6% year over year to $1 billion. Grainger’s operating income in the quarter was up 2.4% year over year to $557 million. The operating margin came in at 13.9% compared with 14.3% in the prior-year quarter.
Financial Position
The company had cash and cash equivalents of $660 million at the end of 2023, up from $325 million at 2022-end. Cash flow from operating activities was $2.03 billion in 2023 compared with $1.33 billion last year.
The long-term debt was $2.27 billion as of Dec 31, 2023, compared with $2.28 million as of Dec 31, 2022. Grainger returned $1.2 billion to shareholders through dividends and share buybacks through 2023. Capital expenditure for the year was $445 million.
2023 Performance
Adjusted EPS rose 23.6% year over year to $36.67 in 2023, surpassing the Zacks Consensus Estimate of $36.37. Including one-time items, EPS was $36.23 in 2023 compared with $30.06 in 2022.
Sales improved 8.2% year over year to $16.48 billion. The top line missed the Zacks Consensus Estimate of $16.52 billion. Sales rose 9.5% on a daily, constant-currency basis.
2024 Outlook
Grainger expects net sales between $17.2 billion and $17.7 billion. Sales growth is expected to be 4.3-7.3%. Daily sales growth is envisioned at 4-7%. Earnings per share are expected to be $38.00- $40.50.
Price Performance
In the past year, GWW shares have gained 37.9% compared with the industry’s 9.9% growth.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Grainger currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for AZZ’s fiscal 2024 earnings per share is pegged at $4.19. The consensus estimate for 2024 earnings has moved north by 2% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 37.6%. AZZ shares have rallied 51.8% in the past year.
Applied Industrial has an average trailing four-quarter earnings surprise of 13.9%. The Zacks Consensus Estimate for AIT’s 2024 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have been unchanged in the past 60 days. The company’s shares have gained 26.1% in a year.
The Zacks Consensus Estimate for A. O. Smith’s 2024 earnings is pegged at $4.03 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days and suggests year-over-year growth of 6.8%. The company has a trailing four-quarter average earnings surprise of 14%. AOS shares have gained 16% in the past year.
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Grainger (GWW) Q4 Earnings Beat Estimates, Sales Rise Y/Y
W.W. Grainger, Inc. (GWW - Free Report) has reported adjusted earnings per share (EPS) of $8.33 in fourth-quarter 2023, beating the Zacks Consensus Estimate of $8.03. The bottom line improved 16.7% year over year, aided by volume growth in the High-Touch Solutions N.A. and Endless Assortment segments.
Including one-time items, EPS was $7.89 in the quarter under review compared with $7.54 in the prior-year quarter.
Grainger’s quarterly sales rose 5.1% year over year to $3.99 billion. However, the top line missed the Zacks Consensus Estimate of $4.04 billion. Daily sales increased 5.1% from the prior-year quarter. We predicted daily sales to increase 6.4%.
The High-Touch Solutions N.A. segment’s daily sales rose 4.7% in the quarter from the fourth quarter of 2022, driven by solid volume growth. Our model predicted year-over-year organic daily sales growth of 7.1%.
The Endless Assortment segment’s daily sales grew 6% in the quarter due to increased customer acquisition across the segment and enterprise customer growth at MonotaRO. The upside was partially offset by declining sales to non-core, consumer-like customers at Zoro. Our model predicted year-over-year organic daily sales growth of 3.3% for the quarter.
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
The cost of sales climbed 6% year over year to $2.43 billion. The gross profit rose 3.8% year over year to $1.56 billion. The gross margin came in at 39.1% in the quarter compared with the prior-year period’s 39.6%.
Selling, general and administrative expenses rose 4.6% year over year to $1 billion. Grainger’s operating income in the quarter was up 2.4% year over year to $557 million. The operating margin came in at 13.9% compared with 14.3% in the prior-year quarter.
Financial Position
The company had cash and cash equivalents of $660 million at the end of 2023, up from $325 million at 2022-end. Cash flow from operating activities was $2.03 billion in 2023 compared with $1.33 billion last year.
The long-term debt was $2.27 billion as of Dec 31, 2023, compared with $2.28 million as of Dec 31, 2022. Grainger returned $1.2 billion to shareholders through dividends and share buybacks through 2023. Capital expenditure for the year was $445 million.
2023 Performance
Adjusted EPS rose 23.6% year over year to $36.67 in 2023, surpassing the Zacks Consensus Estimate of $36.37. Including one-time items, EPS was $36.23 in 2023 compared with $30.06 in 2022.
Sales improved 8.2% year over year to $16.48 billion. The top line missed the Zacks Consensus Estimate of $16.52 billion. Sales rose 9.5% on a daily, constant-currency basis.
2024 Outlook
Grainger expects net sales between $17.2 billion and $17.7 billion. Sales growth is expected to be 4.3-7.3%. Daily sales growth is envisioned at 4-7%. Earnings per share are expected to be $38.00- $40.50.
Price Performance
In the past year, GWW shares have gained 37.9% compared with the industry’s 9.9% growth.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Grainger currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are AZZ Inc. (AZZ - Free Report) , Applied Industrial Technologies (AIT - Free Report) and A. O. Smith Corporation (AOS - Free Report) . AZZ currently sports a Zacks Rank #1 (Strong Buy), and AIT and AOS carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AZZ’s fiscal 2024 earnings per share is pegged at $4.19. The consensus estimate for 2024 earnings has moved north by 2% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 37.6%. AZZ shares have rallied 51.8% in the past year.
Applied Industrial has an average trailing four-quarter earnings surprise of 13.9%. The Zacks Consensus Estimate for AIT’s 2024 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have been unchanged in the past 60 days. The company’s shares have gained 26.1% in a year.
The Zacks Consensus Estimate for A. O. Smith’s 2024 earnings is pegged at $4.03 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days and suggests year-over-year growth of 6.8%. The company has a trailing four-quarter average earnings surprise of 14%. AOS shares have gained 16% in the past year.