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W.W. Grainger, Inc. (GWW), headquartered in Lake Forest, Illinois, is a broad-line distributor of maintenance, repair, and operating (MRO) products. With a market cap of $54.6 billion, Grainger provides innovative supply chain solutions to businesses and institutions across various industries in the U.S. and internationally.
Shares of GWW have substantially outperformed the broader market over the past year. GWW has gained 55.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 32.6%. Also, in 2024, the stock is up 45.5%, compared to the SPX’s 26.5% rise on a YTD basis.
Narrowing the focus, GWW has also surpassed the Industrial Select Sector SPDR Fund (XLI). The exchange-traded fund has gained 36% over the past year and 26.3% on a YTD basis.
On Oct. 31, GWW’s shares rose marginally after the company posted its Q3 earnings report. Its EPS and revenue of $9.87 and $4.4 billion missed the market’s expectations. On the bright side, the company achieved a strong operating margin of 15.6% and generated $611 million in operating cash flow. Grainger returned $328 million to shareholders through dividends and share repurchases.
For the current fiscal year, ending in December, analysts expect GWW’s EPS to grow 6.1% year over year to $38.92 on a diluted basis. The company's earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 16 analysts covering GWW stock, the consensus rating is a “Hold.” That’s based on two “Strong Buy” ratings, 13 “Holds,” and one “Moderate Sell.”
This consensus has been fairly consistent over the past months.
On Nov. 19, Morgan Stanley (MS) raised its price target for WW Grainger to $1,215 from $990 while maintaining an “Equal-weight” rating. This adjustment reflects expectations for organic growth and improved gross margins heading into fiscal year 2025. The increased price target is based on higher EPS projections, fueled by anticipated gross margin gains in Q4 2024 and Q1 2025.
While GGW currently trades over the mean price target of $1,120.50, the Street-high price target of $1280 suggests an upside potential of 6.2%.
