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Based on W.W. Grainger, Inc.’s (NYSE:GWW) earnings update in March 2019, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 26% next year relative to the past 5-year average growth rate of -3.6%. With trailing-twelve-month net income at current levels of US$776m, we should see this rise to US$981m in 2020. Below is a brief commentary on the longer term outlook the market has for W.W. Grainger. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will W.W. Grainger perform in the near future?
The 22 analysts covering GWW view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of GWW’s earnings growth over these next few years.
This results in an annual growth rate of 7.8% based on the most recent earnings level of US$776m to the final forecast of US$1.1b by 2022. EPS reaches $22.43 in the final year of forecast compared to the current $13.82 EPS today. In 2022, GWW’s profit margin will have expanded from 6.9% to 8.6%.
Future outlook is only one aspect when you’re building an investment case for a stock. For W.W. Grainger, I’ve put together three relevant aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is W.W. Grainger worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether W.W. Grainger is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of W.W. Grainger? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.