Today we’re going to take a look at the well-established WW. Grainger Inc. (NYSE:GWW). The company’s stock saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine W.W. Grainger’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. View our latest analysis for W.W. Grainger
What is W.W. Grainger worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11% above my intrinsic value, which means if you buy W.W. Grainger today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $230.54, there’s only an insignificant downside when the price falls to its real value. Furthermore, it seems like W.W. Grainger’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of W.W. Grainger look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. W.W. Grainger’s earnings over the next few years are expected to increase by 59.03%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in GWW’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on GWW, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, 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 pass 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.