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How Do Analysts See W.W. Grainger, Inc. (NYSE:GWW) Performing In The Next Couple Of Years?

Rowena Monahan

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The most recent earnings release W.W. Grainger, Inc.’s (NYSE:GWW) announced in December 2018 indicated that the business gained from a robust tailwind, leading to a double-digit earnings growth of 35%. Below, I’ve laid out key growth figures on how market analysts perceive W.W. Grainger’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for W.W. Grainger

Market analysts’ prospects for this coming year seems positive, with earnings growing by a robust 27%. This growth seems to continue into the following year with rates reaching double digit 38% compared to today’s earnings, and finally hitting US$1.1b by 2022.

NYSE:GWW Past and Future Earnings, February 24th 2019

While it is useful to understand the growth year by year relative to today’s value, it may be more insightful estimating the rate at which the earnings are growing every year, on average. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of W.W. Grainger’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 9.5%. This means, we can assume W.W. Grainger will grow its earnings by 9.5% every year for the next couple of years.

Next Steps:

For W.W. Grainger, I’ve compiled three key aspects you should look at:

  1. 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.
  2. Valuation: What is GWW 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 GWW is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GWW? 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 editorial-team@simplywallst.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.