W.W. Grainger, Inc. (NYSE:GWW) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $359.38 at one point, and dropping to the lows of $271.23. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether W.W. Grainger’s current trading price of $287.8 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at W.W. Grainger’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What’s the opportunity in W.W. Grainger?W.W. Grainger appears to be overvalued by 20.66% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$288 on the market compared to my intrinsic value of $238.53. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that W.W. Grainger’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of W.W. Grainger look like?Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by 59% over the next couple of years, the future seems bright for W.W. Grainger. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? GWW’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe GWW should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on GWW for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for GWW, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on W.W. Grainger. You can find everything you need to know about W.W. Grainger in the latest infographic research report. If you are no longer interested in W.W. Grainger, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.