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Grainger (GWW) Earnings & Sales Miss Estimates in Q2, Up Y/Y

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W.W. Grainger, Inc. GWW reported second-quarter 2021 adjusted earnings per share (EPS) of $4.27, missing the Zacks Consensus Estimate of $4.61. The bottom line, however, increased 14%, year over year, primarily on higher operating earnings and lower average shares outstanding in the current period.

Including one-time items, earnings came in at $4.27 in the reported quarter. The figure surged 103% from the year-ago quarter.

Grainger’s quarterly revenues went up 13% year over year to $3,207 million. The top line also lagged the Zacks Consensus Estimate of $3,234 million.

Daily sales for the quarter increased 13.1% compared with the prior-year period. This increase in sales was driven by a strong performance in both the High-Touch Solutions North America (N.A.) and Endless Assortment segments.

W.W. Grainger, Inc. Price, Consensus and EPS Surprise

W.W. Grainger, Inc. Price, Consensus and EPS Surprise
W.W. Grainger, Inc. Price, Consensus and EPS Surprise

W.W. Grainger, Inc. price-consensus-eps-surprise-chart | W.W. Grainger, Inc. Quote

Operational Update

Cost of sales increased 14% year over year to $2,083 million. Gross profit climbed 11% year over year to $1,124 million. Gross margin came in at 35% in the quarter, marginally down from the prior-year period’s 35.8%.

Grainger’s adjusted operating income in the second quarter was up 6% year on year to $334 million. Adjusted operating margin came in at 10.4% compared with the prior-year quarter’s 11.1%.

Financial Position

The company had cash and cash equivalents of $547 million as of Jun 30, 2021, down from $585 million as of Dec 31, 2020. Cash provided by operating activities increased to $269 million in second-quarter 2021 from the prior-year quarter’s $232 million.

Long-term debt was $2,375 million as of Jun 30, 2021, compared with $2,389 million as of Dec 31, 2020. During the second quarter, the company returned $203 million to shareholders through dividends and share buybacks.

2021 Outlook

Grainger projects net sales for the current year to lie between $12.7 billion and $13 billion. The company anticipates earnings per share in the band of $19.00-$20.50 for 2021.

Price Performance

Over the past year, Grainger’s shares have gained 37.2% compared with the industry’s growth of 18.2%.

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Zacks Rank and Stocks to Consider

Grainger currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Industrial Products sector include Greif, Inc. GEF, Lindsay Corp. LNN and Pentair plc PNR. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained 29.9%, in the past year.

Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. In a year's time, the company’s shares have rallied 22.3%.

Pentair has a projected earnings growth rate of 26% for 2021. The stock has appreciated 36.7%, over the past year.


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