Grainger’s Stock Soars: What Investors Need to Know
Company Profile: W.W. Grainger, Inc. (GWW), based in Lake Forest, Illinois, is a major distributor of maintenance, repair, and operating (MRO) products. With a market capitalization of $54.6 billion, Grainger offers supply chain solutions to a range of industries both in the U.S. and globally.
Strong Performance Against the Market
Over the past year, Grainger’s shares have significantly outperformed the broader market. GWW has increased by 55.4%, while the S&P 500 Index ($SPX) has risen nearly 32.6%. In 2024 alone, GWW’s stock is up 45.5%, compared to the S&P 500’s 26.5% growth year-to-date.
Comparison with Industrial Sector
When focusing on sector performance, GWW has outshined the Industrial Select Sector SPDR Fund (XLI), which reported a 36% year-over-year increase and a 26.3% YTD rise.
Earnings Report Highlights
On October 31, Grainger announced its Q3 earnings. Although its earnings per share (EPS) of $9.87 and revenue of $4.4 billion fell short of market expectations, the company reported a solid operating margin of 15.6% and $611 million in operating cash flow. Additionally, Grainger returned $328 million to its shareholders through dividends and stock buybacks.
Future Earnings Outlook
For the current fiscal year, which ends in December, analysts project GWW’s EPS to rise by 6.1% year over year, reaching $38.92 on a diluted basis. In recent quarters, Grainger’s earnings surprises have been inconsistent, beating analysts’ estimates three times in the last four quarters.
Market Analysts Weigh In
Among the 16 analysts following GWW, the consensus rating is a “Hold.” This includes two “Strong Buy” ratings, 13 “Holds,” and one “Moderate Sell.” This consensus has remained relatively steady over several months.
Updated Price Targets from Morgan Stanley
On November 19, Morgan Stanley (MS) increased its price target for W.W. Grainger to $1,215 from $990 while retaining an “Equal-weight” rating. This change reflects expectations for organic growth and improved gross margins as the fiscal year 2025 approaches. The revised target is based on increased EPS predictions fueled by anticipated gross margin improvements in Q4 2024 and Q1 2025.
Currently, GWW trades above the average price target of $1,120.50, but the highest price target on the street is set at $1,280, suggesting potential upside of around 6.2%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
