NYSE:GWW

Stock Analysis Report

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Executive Summary

W.W. Grainger, Inc. distributes maintenance, repair, and operating (MRO) products and services in the United States, Canada, and internationally.


Snowflake Analysis

Established dividend payer with adequate balance sheet.


Similar Companies

Share Price & News

How has W.W. Grainger's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: GWW's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

0.2%

GWW

2.3%

US Trade Distributors

1.7%

US Market


1 Year Return

17.0%

GWW

-0.1%

US Trade Distributors

8.5%

US Market

Return vs Industry: GWW exceeded the US Trade Distributors industry which returned 0.9% over the past year.

Return vs Market: GWW exceeded the US Market which returned 9.3% over the past year.


Shareholder returns

GWWIndustryMarket
7 Day0.2%2.3%1.7%
30 Day15.8%16.8%9.5%
90 Day8.5%-1.6%0.1%
1 Year19.3%17.0%1.9%-0.1%11.0%8.5%
3 Year97.6%85.8%19.4%13.9%32.2%23.5%
5 Year44.6%30.0%25.9%16.2%58.6%40.8%

Price Volatility Vs. Market

How volatile is W.W. Grainger's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is W.W. Grainger undervalued compared to its fair value and its price relative to the market?

22.2x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: GWW ($314.99) is trading above our estimate of fair value ($275.39)

Significantly Below Fair Value: GWW is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: GWW is poor value based on its PE Ratio (22.2x) compared to the Trade Distributors industry average (15.7x).

PE vs Market: GWW is poor value based on its PE Ratio (22.2x) compared to the US market (15.7x).


Price to Earnings Growth Ratio

PEG Ratio: GWW is poor value based on its PEG Ratio (1.8x)


Price to Book Ratio

PB vs Industry: GWW is overvalued based on its PB Ratio (9.3x) compared to the US Trade Distributors industry average (1.2x).


Next Steps

Future Growth

How is W.W. Grainger forecast to perform in the next 1 to 3 years based on estimates from 19 analysts?

12.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: GWW's forecast earnings growth (12.5% per year) is above the savings rate (2.2%).

Earnings vs Market: GWW's earnings (12.5% per year) are forecast to grow slower than the US market (22% per year).

High Growth Earnings: GWW's earnings are forecast to grow, but not significantly.

Revenue vs Market: GWW's revenue (6.4% per year) is forecast to grow slower than the US market (8.8% per year).

High Growth Revenue: GWW's revenue (6.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: GWW's Return on Equity is forecast to be very high in 3 years time (43.5%).


Next Steps

Past Performance

How has W.W. Grainger performed over the past 5 years?

2.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: GWW has a large one-off loss of $308.0M impacting its March 31 2020 financial results.

Growing Profit Margin: GWW's current net profit margins (6.6%) are lower than last year (7.1%).


Past Earnings Growth Analysis

Earnings Trend: GWW's earnings have grown by 2.8% per year over the past 5 years.

Accelerating Growth: GWW's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: GWW had negative earnings growth (-4.3%) over the past year, making it difficult to compare to the Trade Distributors industry average (-5.5%).


Return on Equity

High ROE: Whilst GWW's Return on Equity (40.3%) is outstanding, this metric is skewed due to their high level of debt.


Next Steps

Financial Health

How is W.W. Grainger's financial position?


Financial Position Analysis

Short Term Liabilities: GWW's short term assets ($4.9B) exceed its short term liabilities ($1.5B).

Long Term Liabilities: GWW's short term assets ($4.9B) exceed its long term liabilities ($3.6B).


Debt to Equity History and Analysis

Debt Level: GWW's debt to equity ratio (153.3%) is considered high.

Reducing Debt: GWW's debt to equity ratio has increased from 20.2% to 153.3% over the past 5 years.

Debt Coverage: GWW's debt is well covered by operating cash flow (37.2%).

Interest Coverage: GWW's interest payments on its debt are well covered by EBIT (17.1x coverage).


Balance Sheet


Next Steps

Dividend

What is W.W. Grainger's current dividend yield, its reliability and sustainability?

1.83%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: GWW's dividend (1.83%) is higher than the bottom 25% of dividend payers in the US market (1.69%).

High Dividend: GWW's dividend (1.83%) is low compared to the top 25% of dividend payers in the US market (4.55%).


Stability and Growth of Payments

Stable Dividend: GWW's dividends per share have been stable in the past 10 years.

Growing Dividend: GWW's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (40.6%), GWW's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: GWW's dividends in 3 years are forecast to be well covered by earnings (36.5% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.7yrs

Average management tenure


CEO

DG Macpherson (51yo)

3.67yrs

Tenure

US$7,665,127

Compensation

Mr. Donald G. Macpherson, also known as DG, has been the Chief Executive Officer of W.W. Grainger, Inc. since October 01, 2016 and has been its Chairman since October 2017. Mr. Macpherson served as the Chi ...


CEO Compensation Analysis

Compensation vs Market: DG's total compensation ($USD7.67M) is below average for companies of similar size in the US market ($USD11.64M).

Compensation vs Earnings: DG's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Donald Macpherson
Chairman & CEO3.67yrsUS$7.67m0.064% $10.7m
Thomas Okray
Senior VP & CFO2.08yrsUS$2.88m0.013% $2.2m
John Howard
Senior VP & General Counsel20.42yrsUS$2.51m0.037% $6.2m
Paige Robbins
Senior VP and Chief Technology0.58yrUS$1.45m0.016% $2.6m
Deidra Merriwether
Senior VP & President of North American Sales and Serviceno dataUS$1.13mno data
Jonny LeRoy
Chief Technology Officer0.17yrno datano data
Irene Holman
Vice President of Investor Relations1.92yrsno datano data
Kathleen Carroll
Senior VP & Chief Human Resources Officer1.5yrsno data0.0011% $178.5k
Masaya Suzuki
Managing Director of Endless Assortment Business0.33yrno datano data
Hugo Dubovoy
VP & Corporate Secretaryno datano datano data

1.7yrs

Average Tenure

50yo

Average Age

Experienced Management: GWW's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Donald Macpherson
Chairman & CEO3.67yrsUS$7.67m0.064% $10.7m
Brian Anderson
Independent Director21.42yrsUS$247.48k0.0063% $1.1m
Stuart Levenick
Lead Director4.17yrsUS$282.48k0.00075% $126.3k
Neil Novich
Independent Director21.42yrsUS$254.98k0.0086% $1.5m
V. Hailey
Independent Director14.08yrsUS$267.48k0.00037% $62.3k
Michael Roberts
Independent Director14.33yrsUS$269.98k0.0019% $314.9k
E. Santi
Independent Director10.17yrsUS$247.48k0.00057% $96.0k
Rodney Adkins
Independent Director5.92yrsUS$254.98k0.00075% $126.3k
Beatriz Perez
Independent Director2.92yrsUS$254.98kno data
Lucas Watson
Independent Director3.42yrsUS$254.98k0.00036% $60.6k

8.0yrs

Average Tenure

62yo

Average Age

Experienced Board: GWW's board of directors are considered experienced (8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

W.W. Grainger, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: W.W. Grainger, Inc.
  • Ticker: GWW
  • Exchange: NYSE
  • Founded: 1927
  • Industry: Trading Companies and Distributors
  • Sector: Capital Goods
  • Market Cap: US$16.842b
  • Shares outstanding: 53.47m
  • Website: https://www.grainger.com

Number of Employees


Location

  • W.W. Grainger, Inc.
  • 100 Grainger Parkway
  • Lake Forest
  • Illinois
  • 60045-5201
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
GWWNYSE (New York Stock Exchange)YesCommon StockUSUSDJul 1971
GWWDB (Deutsche Boerse AG)YesCommon StockDEEURJul 1971
0IZILSE (London Stock Exchange)YesCommon StockGBUSDJul 1971
G1WW34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 5 REPR 1 COMBRBRLJan 2020

Biography

W.W. Grainger, Inc. distributes maintenance, repair, and operating (MRO) products and services in the United States, Canada, and internationally. The company provides material handling equipment, safety and security supplies, lighting and electrical products, power and hand tools, pumps and plumbing supplies, cleaning and maintenance supplies, and metalworking tools, as well as gloves, ladders, motors, and janitorial supplies. It also offers inventory management and technical support services. The company provides its products through branches, sales and service representatives, contact centers, distribution centers, and catalogs, as well as through e-commerce platform. It serves small and mid-sized businesses, large corporations, government entities, and other institutions. W.W. Grainger, Inc. was founded in 1927 and is headquartered in Lake Forest, Illinois. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/06/03 02:14
End of Day Share Price2020/06/02 00:00
Earnings2020/03/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.