WW Grainger (GWW) AI Stock Analysis

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WW Grainger

(NYSE:GWW)

Rating:77Outperform

Price Target:―

Grainger shows robust financial performance with strong revenue growth and profitability, supported by efficient equity use and solid cash management. Technical indicators reflect positive momentum but caution is advised due to high RSI and Stochastics. Valuation metrics suggest the stock is priced at a premium, with limited income appeal from dividends. The recent earnings call highlights both strengths in sales growth and profitability, as well as challenges with tariffs and segment performance. Overall, Grainger holds a strong position, yet valuation and technical caution are warranted.

Positive Factors

Business Resilience

GWW is viewed as a 'port in the storm' with its resilient business model, strong price power, and clean balance sheet.

Financial Performance

Shares are up 3% with first-quarter results as expected, indicating positive financial performance.

Growth Prospects

GWW stands out as having a more achievable bar on 2025 consensus organic growth.

Negative Factors

Sales and Margins

The key miss was 2025 guide which came in short across sales, margins, and EPS.

Tariff Risks

There are concerns about the FY25 guidance framework, which embeds no impact for tariffs, likely pinching margins to the low-end of the guide.

Valuation Risks

Valuation has fallen to a more comfortable position vs. peers, but remains extended at approximately 24x NTM P/E vs. a 20x 5Y median, indicating potential downside risk.

WW Grainger (GWW) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$51.79B

Dividend Yield0.76%

Average Volume (3M)258.00K

Price to Earnings (P/E)27.5

Beta (1Y)0.85

Revenue Growth3.71%

EPS Growth7.23%

CountryUS

Employees23,500

SectorIndustrials

Sector Strength92

IndustryIndustrial - Distribution

Share Statistics

EPS (TTM)9.86

Shares Outstanding48,039,210

10 Day Avg. Volume244,917

30 Day Avg. Volume258,000

Financial Highlights & Ratios

PEG Ratio63.81

Price to Book (P/B)14.36

Price to Sales (P/S)0.00

P/FCF Ratio32.16

Enterprise Value/Market Cap1.00

Enterprise Value/Revenue0.76

Enterprise Value/Gross Profit7.62

Enterprise Value/Ebitda4.57

Forecast

1Y Price Target

$1,056.00

Price Target Upside-1.48% Downside

Rating ConsensusHold

Number of Analyst Covering7

WW Grainger Business Overview & Revenue Model

Company DescriptionW.W. Grainger, Inc. distributes maintenance, repair, and operating (MRO) products and services in the United States, Japan, Canada, the United Kingdom, and internationally. The company operates through two segments, High-Touch Solutions N.A. and Endless Assortment. It offers safety and security supplies, material handling and storage equipment, pumps and plumbing equipment, cleaning and maintenance supplies, and metalworking and hand tools. It also offers inventory management and technical support services. The company serves businesses, corporations, government entities, and other institutions through sales and service representatives, and electronic and ecommerce channels. W.W. Grainger, Inc. was founded in 1927 and is headquartered in Lake Forest, Illinois.

How the Company Makes MoneyW.W. Grainger generates revenue primarily through the sale of MRO products to businesses and institutions. The company's diversified product catalog includes over a million products sourced from thousands of suppliers. Grainger's key revenue streams include direct sales through its e-commerce platform and physical sales channels. The company also benefits from value-added services such as inventory management solutions and technical support, which enhance customer loyalty and drive repeat business. Strategic partnerships with suppliers and logistic providers, along with a robust supply chain infrastructure, contribute significantly to Grainger's ability to offer competitive pricing and maintain high service levels, thereby supporting its earnings.

WW Grainger Key Performance Indicators (KPIs)

Any

Operating Earnings by Segment

Operating Earnings by Segment
Reveals the profitability of each business segment, indicating which divisions are most efficient and contribute most to the bottom line, helping assess strategic focus and resource allocation.

Chart InsightsW.W. Grainger's High Touch Solutions segment shows fluctuating earnings with recent stabilization, but faces challenges with tariffs and SG&A costs. Despite a slight sales decline, operating margins remain robust. The Endless Assortment segment is a bright spot, with strong growth driven by MonotaRO and Zoro U.S., reflecting strategic success. The company maintains confidence in its 2025 guidance, supported by healthy cash flows and increased dividends, yet remains cautious due to macro uncertainties and market outgrowth challenges.

Data provided by:

Main Street Data

WW Grainger Financial Statement Overview

Summary

Grainger exhibits strong financial performance across all verticals. The company maintains solid revenue growth and profitability, supported by efficient use of equity and prudent cash management. While asset levels show some decline, the company's leverage is moderate, and cash flows remain strong, indicating a well-balanced financial position.

Income Statement

Very Positive

Grainger shows strong income statement performance with consistent revenue growth and healthy profitability margins. The Gross Profit Margin for TTM is 39.45%, with a Net Profit Margin of 11.08%. The EBIT and EBITDA margins are also robust at 15.31% and 16.46%, respectively. Revenue has grown steadily over the years, with a TTM growth rate of 4.17% compared to the previous annual report. This indicates a stable and profitable business trajectory.

Balance Sheet

Positive

Grainger demonstrates solid financial health with a Debt-to-Equity Ratio of 0.31, indicating moderate leverage. The Return on Equity (ROE) is impressive at 22.06% for TTM, showcasing efficient use of equity capital. The Equity Ratio stands at 100%, highlighting a strong equity base relative to assets. However, total assets have slightly decreased, which might need attention if it continues.

Cash Flow

Positive

Grainger's cash flow performance is commendable, with a stable Free Cash Flow supported by strong operating cash flows. The Free Cash Flow Growth Rate is slightly negative, but the Operating Cash Flow to Net Income Ratio of 1.10 for TTM signifies healthy cash generation relative to net income. The Free Cash Flow to Net Income Ratio is also robust at 0.81, indicating good cash conversion.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
17.24B	17.17B	16.48B	15.23B	13.02B	11.80B
	Gross Profit
6.80B	6.76B	6.50B	5.85B	4.72B	4.24B
	EBIT
2.64B	2.64B	2.56B	2.21B	1.55B	1.02B
	EBITDA
2.84B	2.90B	2.81B	2.40B	1.74B	1.22B
	Net Income Common Stockholders
1.91B	1.91B	1.83B	1.55B	1.04B	695.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
666.00M	1.04B	660.00M	325.00M	241.00M	585.00M
	Total Assets
8.66B	8.83B	8.15B	7.59B	6.59B	6.29B
	Total Debt
2.68B	3.18B	2.75B	2.71B	2.76B	2.40B
	Net Debt
2.01B	2.15B	2.09B	2.38B	2.52B	1.81B
	Total Liabilities
4.81B	5.13B	4.71B	4.85B	4.43B	4.20B
	Stockholders Equity
3.48B	3.36B	3.12B	2.73B	2.16B	2.09B
Cash Flow		Free Cash Flow
1.55B	1.57B	1.59B	1.08B	682.00M	926.00M
	Operating Cash Flow
2.10B	2.11B	2.03B	1.33B	937.00M	1.12B
	Investing Cash Flow
-527.00M	-520.00M	-422.00M	-263.00M	-226.00M	-179.00M
	Financing Cash Flow
-1.69B	-1.18B	-1.28B	-972.00M	-1.04B	-726.00M

WW Grainger Technical Analysis

Technical Analysis Sentiment

Positive

Last Price1071.88

Price Trends

50DMA

1011.40

Positive

100DMA

1027.75

Positive

200DMA

1048.46

Positive

Market Momentum

MACD

21.39

Positive

RSI

58.07

Neutral

STOCH

49.62

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GWW, the sentiment is Positive. The current price of 1071.88 is above the 20-day moving average (MA) of 1059.72, above the 50-day MA of 1011.40, and above the 200-day MA of 1048.46, indicating a bullish trend. The MACD of 21.39 indicates Positive momentum. The RSI at 58.07 is Neutral, neither overbought nor oversold. The STOCH value of 49.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GWW.

WW Grainger Risk Analysis

WW Grainger disclosed 24 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 2 New Risks

The proliferation of AI may impact our industry and the markets in which we compete, and the development and use of AI presents competitive, reputational and liability risks. Q4, 2024

Grainger's disclosures related to environmental and social matters expose it to risks that could adversely affect its reputation and performance. Q4, 2024

WW Grainger Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FAST	77 Outperform	$46.71B	40.62	32.35%	2.03%	3.08%	-0.76%
GWW	77 Outperform	$51.79B	27.53	57.19%	0.76%	3.71%	7.23%
WCC	75 Outperform	$8.04B	12.46	14.38%	1.02%	-1.80%	9.55%
AIT	72 Outperform	$8.50B	22.39	22.23%	0.70%	0.50%	4.48%
MSM	69 Neutral	$4.41B	20.81	15.53%	4.28%	-5.71%	-31.93%
Sector *	64 Neutral	$4.39B	11.81	5.20%	249.38%	3.96%	-12.36%
FERG		£26.53B	20.72	29.63%	1.89%	―	―

* Industrials Sector Average

Performance Comparison

GWW

WW Grainger

1,071.88

113.17

11.80%

AIT

Applied Industrial Technologies

222.81

28.45

14.64%

FAST

Fastenal Company

40.65

8.36

25.89%

MSM

MSC Industrial

78.68

-5.96

-7.04%

WCC

Wesco International

164.68

-24.59

-12.99%

GB:FERG

Ferguson PLC

13,110.00

-3,066.01

-18.95%

WW Grainger Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q1-2025)

% Change Since: 4.87%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed view with steady growth in sales and profitability, strong cash flows, and strategic increases in dividends. However, challenges with tariffs, weaker than expected performance in certain segments, and issues with SG&A costs and market outgrowth metrics present concerns. Despite these challenges, there is confidence in navigating the current environment.

Q1-2025 Updates

Positive Updates

Steady Revenue Growth

Total company reported sales for the quarter were up 1.7%, or 4.4% on a daily constant currency basis.

Healthy Operating Margins

Operating margins for the company remained healthy at 15.6%, with diluted EPS finishing the quarter at $9.86, up 2.5% compared to the prior year.

Strong Cash Flow and Shareholder Returns

Operating cash flow came in at $646 million, allowing a return of $380 million to shareholders through dividends and share repurchases. A 10% increase to the quarterly dividend was announced.

Endless Assortment Segment Growth

Sales increased 10.3%, or 15.3% on a daily constant currency basis, with Zoro U.S. up 18.4% and MonotaRO achieving 13.6% growth in local days, local currency.

Recognition for Company Culture

Grainger received several recognitions, including World's Most Admired Companies and Glassdoor's Best Places to Work.

Negative Updates

Challenges with Tariff Impacts

Tariffs imposed on imports, especially from China, have created a highly fluid and unpredictable environment, affecting sourcing and pricing strategies.

High-Touch Segment Softer Start

Sales in the High-Touch solution segment were down 0.2% on a reported basis, or up 1.9% on a daily constant currency basis, affected by weather, holiday timing, and government softness.

SG&A Deleverage

SG&A costs for the High-Touch segment increased, leading to an 80 basis points deleverage for the quarter.

Market Outgrowth Challenges

An internal model suggests MRO market volume actually declined in the low single digits during the first quarter, questioning the relevance of the quarterly outgrowth disclosure.

Company Guidance

During the W.W. Grainger First Quarter 2025 Earnings Call, the company reaffirmed its 2025 guidance despite the volatile environment. Total company reported sales for the quarter increased by 1.7% or 4.4% on a daily constant currency basis, with operating margins remaining healthy at 15.6%. Diluted EPS rose by 2.5% to $9.86, and operating cash flow was $646 million, allowing the company to return $380 million to shareholders through dividends and share repurchases. Additionally, Grainger announced a 10% increase in its quarterly dividend. The High-Touch Solutions segment experienced a slight decline in reported sales by 0.2%, but a 1.9% increase on a daily constant currency basis, with operating margins at 17.7%. Meanwhile, the Endless Assortment segment saw sales increase by 10.3% or 15.3% on a daily constant currency basis, with MonotaRO and Zoro U.S. contributing to an operating margin increase of 80 basis points to 8.7%. The company addressed the impact of tariffs, noting a modest initial pricing action with a targeted price-cost neutrality over time, and highlighted that the macro environment remains fluid, necessitating agility in navigating the uncertainties.

WW Grainger Corporate Events

Shareholder MeetingsBusiness Operations and Strategy

WW Grainger Amends Articles, Alters Governance Structure

Neutral

May 15, 2025

On April 30, 2025, W.W. Grainger, Inc. held its annual meeting of shareholders where a proposal to amend the company’s Restated Articles of Incorporation to eliminate cumulative voting was approved. This amendment, effective May 9, 2025, led to changes in the company’s by-laws to reflect the elimination of cumulative voting, impacting the company’s governance structure.

The most recent analyst rating on (GWW) stock is a Buy with a $1125.00 price target. To see the full list of analyst forecasts on WW Grainger stock, see the GWW Stock Forecast page.

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.