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W.W. Grainger (GWW)
NYSE:GWW
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WW Grainger
(NYSE:GWW)71Outperform
Positive Factors
Earnings
EPS forecasts and price target are being raised to $1,215 due to organic and gross margin upside into FY'25.
Negative Factors
Market Performance
The key miss was 2025 guide which came in short across sales, margins, and EPS.
Market Share
Market share gains slowed and margins contracted in 1H24, which is expected to continue.
WW Grainger (GWW) vs. S&P 500 (SPY)
Market Cap
$49.24B
Dividend Yield0.82%
Average Volume (3M)296.82K
Price to Earnings (P/E)26.2
Beta (1Y)0.97
Revenue Growth4.19%
EPS Growth6.60%
CountryUS
Employees26,000
SectorIndustrials
Sector Strength66
IndustryIndustrial Equipment Distributors
Share Statistics
EPS (TTM)38.92
Shares Outstanding48,216,710
10 Day Avg. Volume278,597
30 Day Avg. Volume296,823
Financial Highlights & Ratios
PEG Ratio3.97
Price to Book (P/B)N/A
Price to Sales (P/S)2.87
Price to Cash Flow (P/CF)28.80
P/FCF Ratio26.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$1,117.83Price Target Upside13.05% Upside
Rating ConsensusHold
Number of Analyst Covering8
WW Grainger Business Overview & Revenue Model
Company DescriptionW.W. Grainger, Inc. is a leading industrial supply company that provides businesses and institutions with a wide range of maintenance, repair, and operating (MRO) products and services. The company operates in sectors such as manufacturing, commercial, government, and healthcare, offering products that include safety supplies, electrical items, lighting solutions, and tools. With a strong e-commerce platform and a robust distribution network, Grainger serves customers primarily in North America but has a presence globally.
How the Company Makes MoneyW.W. Grainger makes money primarily through the sale of MRO products to businesses and institutions. The company generates revenue through its comprehensive catalog of products, which are sold via its e-commerce platform, direct sales force, and physical branches. Key revenue streams include the sale of safety and security equipment, material handling products, and electrical supplies. Grainger's earnings are bolstered by its ability to offer a broad product selection, competitive pricing, and reliable delivery options. Additionally, the company's strong supplier relationships and efficient supply chain management contribute significantly to its financial performance. Strategic partnerships and acquisitions also play a role in expanding its market reach and enhancing its service offerings.
WW Grainger Financial Statement Overview
Summary
WW Grainger's financial performance is strong, with consistent revenue and profit growth, efficient operations, and solid financial management. The company exhibits healthy profitability and maintains robust cash generation capabilities. While free cash flow growth is slightly negative, the overall financial health is resilient, making GWW a stable entity in the industrial equipment distribution sector.Income Statement
WW Grainger has demonstrated solid revenue growth with a TTM increase of 4.18% compared to the previous year, reflecting a positive growth trajectory. Gross profit margin remains healthy at 39.37%, indicating strong cost management. The net profit margin is robust at 11.12%, underscoring profitability. EBIT and EBITDA margins are also strong at 15.36% and 16.49% respectively, highlighting efficient operations.85
Very Positive
Balance Sheet
The company maintains a solid equity position with an equity ratio of 100%, indicating no leverage risk from debt on equity. The debt-to-equity ratio is low, reflecting prudent financial management. Return on equity stands at 21.63%, demonstrating effective use of equity to generate profits. Overall, the balance sheet is strong, with good liquidity and financial stability.80
Positive
Cash Flow
Operating cash flow exceeds net income, resulting in a favorable operating cash flow to net income ratio of 1.11, indicating strong cash generation. The free cash flow has shown minor fluctuations but remains positive, reflecting good cash management. Free cash flow growth rate is slightly negative, but the company maintains a stable free cash flow to net income ratio of 0.82, showcasing resilience in cash flow operations.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 17.17B | 16.48B | 15.23B | 13.02B | 11.80B | Gross Profit |
| 6.76B | 6.50B | 5.85B | 4.72B | 4.24B | EBIT |
| 2.64B | 2.56B | 2.21B | 1.55B | 1.02B | EBITDA |
| 2.89B | 2.81B | 2.40B | 1.74B | 1.22B | Net Income Common Stockholders |
| 1.91B | 1.83B | 1.55B | 1.04B | 695.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.04B | 660.00M | 325.00M | 241.00M | 585.00M | Total Assets |
| 8.83B | 8.15B | 7.59B | 6.59B | 6.29B | Total Debt |
| 3.18B | 2.75B | 2.71B | 2.76B | 2.40B | Net Debt |
| 2.15B | 2.09B | 2.38B | 2.52B | 1.81B | Total Liabilities |
| 5.13B | 4.71B | 4.85B | 4.43B | 4.20B | Stockholders Equity |
| 3.70B | 3.12B | 2.73B | 2.16B | 2.09B |
| Cash Flow | Free Cash Flow | |||
| 1.57B | 1.59B | 1.08B | 682.00M | 926.00M | Operating Cash Flow |
| 2.11B | 2.03B | 1.33B | 937.00M | 1.12B | Investing Cash Flow |
| -520.00M | -422.00M | -263.00M | -226.00M | -179.00M | Financing Cash Flow |
| -1.18B | -1.28B | -972.00M | -1.04B | -726.00M |
WW Grainger Technical Analysis
Negative
988.78
Price Trends
1059.73
Negative
1100.80
Negative
1026.21
Negative
Market Momentum
-20.69
Positive
30.71
Neutral
37.69
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GWW, the sentiment is Negative. The current price of 988.78 is below the 20-day moving average (MA) of 1021.61, below the 50-day MA of 1059.73, and below the 200-day MA of 1026.21, indicating a bearish trend. The MACD of -20.69 indicates Positive momentum. The RSI at 30.71 is Neutral, neither overbought nor oversold. The STOCH value of 37.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GWW.
WW Grainger Risk Analysis
WW Grainger disclosed 23 risk factors in its most recent earnings report. WW Grainger reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
WW Grainger Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $1.42B | 22.27 | 16.19% | ― | 3.60% | 17.58% | |
78 Outperform | $9.62B | 25.37 | 21.53% | 0.63% | 0.37% | 3.52% | |
73 Outperform | $43.43B | 37.80 | 31.82% | 2.11% | 2.71% | -0.63% | |
72 Outperform | $4.49B | 19.18 | 17.15% | 4.18% | -5.24% | -28.94% | |
71 Outperform | $49.24B | 26.21 | 51.55% | 0.82% | 4.19% | 6.60% | |
68 Neutral | $3.03B | 14.36 | 14.91% | ― | 4.12% | -26.44% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
GWW
WW Grainger
988.78
13.96
1.43%
AIT
Applied Industrial Technologies
229.86
47.17
25.82%
DXPE
DXP Enterprises
81.82
46.76
133.37%
FAST
Fastenal Company
74.23
1.55
2.13%
MSM
MSC Industrial
77.03
-17.87
-18.83%
GMS
GMS
78.19
-11.47
-12.79%
WW Grainger Earnings Call Summary
Earnings Call Date: Jan 31, 2025 | % Change Since: -12.02% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a balanced sentiment with notable successes in financial performance, particularly in the Endless Assortment segment and technology investments. However, challenges such as a sluggish demand environment and potential tariff uncertainties present risks. The company shows resilience and confidence in its strategic direction despite these challenges.Highlights
Strong Full Year 2024 Performance
Grainger achieved over $17.2 billion in sales, marking a 4.2% increase on a reported basis and a 4.7% increase on a daily organic constant currency basis. Adjusted EPS grew by over 6% to $38.96 per share, with an ROIC of 41.6%.
Endless Assortment Segment Success
The segment showed significant improvement with daily constant currency sales up 11.6%. MonotaRO achieved 29% growth with enterprise customers, and Zoro returned to double-digit sales growth by the end of the year.
High-Touch Solutions Market Outgrowth
The High-Touch Solutions U.S. business outgrew the market by approximately 100 basis points, driven by 325 basis points of volume outgrowth for the year.
Investment in Technology and Data
Grainger continues to leverage technology and data, including machine learning and AI, to improve customer service and operational efficiency, notably in inventory management and customer interaction.
Lowlights
Sluggish Demand Environment in 2024
The demand environment throughout 2024 was sluggish, affecting growth rates, particularly in the back half of December due to holiday timing and customer shutdowns.
Challenges in Achieving Volume Growth Targets
Grainger's volume growth in 2024 was below the lower end of their 400 to 500 basis points target, with expectations to remain at the low end of this range for 2025.
Potential Tariff Uncertainties
Grainger did not include potential tariff impacts in their 2025 guidance due to uncertainty, which could pose a risk to cost management.
Company Guidance
During the W.W. Grainger Fourth Quarter 2024 Earnings Conference Call, the company reported robust financial performance and outlined its strategic guidance for 2025. Grainger achieved $17.2 billion in sales for 2024, reflecting a 4.2% increase on a reported basis, with a 15.5% operating margin and adjusted EPS of $38.96, up over 6% from the previous year. The company's ROIC stood at 41.6%, and operating cash flows exceeded $2.1 billion. Looking ahead to 2025, Grainger projects total company revenue to range between $17.6 billion and $18.1 billion, with an operating margin of 15.1% to 15.5%. The guidance includes 4% to 6.5% growth in daily constant currency sales, with the High-Touch Solutions segment expected to grow between 2.5% and 4.5%, and Endless Assortment sales projected to rise between 11% and 15%. Additionally, Grainger plans capital expenditures of $450 million to $550 million, with a continued focus on investing in supply chain capacity and technology advancements to maintain industry-leading service levels. The company also aims to return $1.6 billion to shareholders through dividends and share repurchases, reflecting its commitment to creating sustainable value for stakeholders.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.