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Grainger (GWW) Q2 Earnings & Revenues Lag Estimates, Up Y/Y
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W.W. Grainger, Inc. (GWW - Free Report) posted second-quarter 2019 adjusted earnings per share (EPS) of $4.64, up 6% year over year. Further, earnings missed the Zacks Consensus Estimate of $4.65 by a whisker. Growth in operating earnings and lower average shares outstanding drove Grainger’s quarterly performance.
Including one-time items, such as restructuring and other charges, earnings came in at $4.67 in the reported quarter. The figure improved 12% from $4.16 recorded in the year-ago quarter.
Grainger’s revenues inched up 1% to $2,893 million from the prior-year quarter’s $2,861 million. This upside was driven by an increase of 1.5 percentage point (pp) in volume and 0.5 pp increase in price. However, revenues missed the Zacks Consensus Estimate of $2,988 million.
W.W. Grainger, Inc. Price, Consensus and EPS Surprise
Cost of sales increased 1.3% year over year to $1,772 million. Gross profit inched up to $1,121 million from $1,112 million recorded in the year-earlier quarter. Gross margin shrunk to 38.7% in the quarter from 38.9% reported in the year-ago quarter.
Grainger’s adjusted operating income in the April-June quarter increased 5% to $377 million from $359 million witnessed in the prior-year quarter. Adjusted operating margin expanded 50 bps year-over-year to 13% in the quarter.
Financial Position
The company had cash and cash equivalents of $315 million at the end of the second quarter compared with $313 million at the end of the prior-year quarter. Cash provided by operating activities increased to $323 million for the quarter from the year-ago quarter’s $248 million.
Long-term debt was $2,080 million as of Jun 30, 2019, compared with $2,090 million as of Dec 31, 2018. The company returned $352 million to shareholders through $87 million in dividends and $265 million to buy back around 970,000 shares in the reported quarter.
Outlook
Grainger has maintained its guidance for full-year 2019. Operating margin is forecast in the band of 12.2-13.0%. The company expects EPS of $17.10-$18.70. Gross margin is estimated between 38.1% and 38.7%. Nevertheless, the company lowered its revenue guidance due to a softer demand environment, and weaker performance at AGI and Cromwell. As a result, revenue growth is projected between 2% and 5%, as against the prior estimate of 4-8.5%.
Price Performance
Over the past year, Grainger’s shares have declined 14% compared with the industry’s loss of 13.1%.
Zacks Rank and Stocks to Consider
Grainger currently carries a Zacks Rank #4 (Sell).
Roper Technologies has an estimated earnings growth rate of 9.8% for the ongoing year. The company’s shares have gained 30.3% in the past year.
John Bean Technologies has an expected earnings growth rate of 5.9% for the current year. The stock has appreciated 33.1% in a year’s time.
CECO Environmental has an impressive projected earnings growth rate of 84.8% for 2019. The company’s shares have rallied 29.6% over the past year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Grainger (GWW) Q2 Earnings & Revenues Lag Estimates, Up Y/Y
W.W. Grainger, Inc. (GWW - Free Report) posted second-quarter 2019 adjusted earnings per share (EPS) of $4.64, up 6% year over year. Further, earnings missed the Zacks Consensus Estimate of $4.65 by a whisker. Growth in operating earnings and lower average shares outstanding drove Grainger’s quarterly performance.
Including one-time items, such as restructuring and other charges, earnings came in at $4.67 in the reported quarter. The figure improved 12% from $4.16 recorded in the year-ago quarter.
Grainger’s revenues inched up 1% to $2,893 million from the prior-year quarter’s $2,861 million. This upside was driven by an increase of 1.5 percentage point (pp) in volume and 0.5 pp increase in price. However, revenues missed the Zacks Consensus Estimate of $2,988 million.
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 increased 1.3% year over year to $1,772 million. Gross profit inched up to $1,121 million from $1,112 million recorded in the year-earlier quarter. Gross margin shrunk to 38.7% in the quarter from 38.9% reported in the year-ago quarter.
Grainger’s adjusted operating income in the April-June quarter increased 5% to $377 million from $359 million witnessed in the prior-year quarter. Adjusted operating margin expanded 50 bps year-over-year to 13% in the quarter.
Financial Position
The company had cash and cash equivalents of $315 million at the end of the second quarter compared with $313 million at the end of the prior-year quarter. Cash provided by operating activities increased to $323 million for the quarter from the year-ago quarter’s $248 million.
Long-term debt was $2,080 million as of Jun 30, 2019, compared with $2,090 million as of Dec 31, 2018. The company returned $352 million to shareholders through $87 million in dividends and $265 million to buy back around 970,000 shares in the reported quarter.
Outlook
Grainger has maintained its guidance for full-year 2019. Operating margin is forecast in the band of 12.2-13.0%. The company expects EPS of $17.10-$18.70. Gross margin is estimated between 38.1% and 38.7%. Nevertheless, the company lowered its revenue guidance due to a softer demand environment, and weaker performance at AGI and Cromwell. As a result, revenue growth is projected between 2% and 5%, as against the prior estimate of 4-8.5%.
Price Performance
Over the past year, Grainger’s shares have declined 14% compared with the industry’s loss of 13.1%.
Zacks Rank and Stocks to Consider
Grainger currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Industrial Products sector are Roper Technologies, Inc. (ROP - Free Report) , John Bean Technologies Corp. (JBT - Free Report) and CECO Environmental Corp. , each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here
Roper Technologies has an estimated earnings growth rate of 9.8% for the ongoing year. The company’s shares have gained 30.3% in the past year.
John Bean Technologies has an expected earnings growth rate of 5.9% for the current year. The stock has appreciated 33.1% in a year’s time.
CECO Environmental has an impressive projected earnings growth rate of 84.8% for 2019. The company’s shares have rallied 29.6% over the past year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>