On 30 September 2018, WW Grainger Inc (NYSE:GWW) announced its earnings update. Overall, analyst consensus outlook appear cautiously optimistic, as a 32% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of -6.0%. By 2019, we can expect W.W. Grainger’s bottom line to reach US$768m, a jump from the current trailing-twelve-month US$581m. Below is a brief commentary on the longer term outlook the market has for W.W. Grainger. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The longer term expectations from the 21 analysts of GWW is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of GWW’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2021, GWW’s earnings should reach US$924m, from current levels of US$581m, resulting in an annual growth rate of 13%. EPS reaches $20.57 in the final year of forecast compared to the current $10.07 EPS today. Growth in the bottom line seems to suggest cost cutting activities, as revenues is expected to grow much slower than earnings. Margins is currently sitting at 5.6%, which is expected to expand to 7.5% by 2021.
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 essential factors you should look at:
- 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!
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 firstname.lastname@example.org.