Grainger (GWW) Hits 52-Week High: What's Driving the Upside?
Shares of W.W. Grainger, Inc. GWW scaled a new 52-week high of $686.88 on Mar 2, before closing the session a tad lower at $684.50.
GWW has a market capitalization of $33.7 billion and a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past year, Grainger’s shares have gained 42.2% compared with the industry’s growth of 2%.
Image Source: Zacks Investment Research
Driving Factors
Grainger delivered improvement in the bottom and top lines in 2022, aided by margin improvement in the High-Touch Solutions North America (N.A.) and Endless Assortment segments, as well as strong operating performance.
The High-Touch Solutions N.A. segment has been gaining from volume growth across all geographies and strong price realization. The segment’s gross margin is benefiting from an improved product mix and favorable price spread, realizing a timing benefit. The Endless Assortment segment’s top line improved year over year in the last reported quarter, owing to strong customer acquisition and repeat business. Customer growth at MonotaRO also aids the segment’s revenues.
Despite persisting product shortages and delays, higher SG&A expenses, and rising operating costs, Grainger can negate the impacts with its pricing actions and lower freight costs.
Moreover, the company’s ability to navigate supply-chain challenges, backed by an improved non-pandemic product mix, is driving margins. Grainger’s initiatives to manage inventory effectively and invest in marketing are resulting in further profitability.
Backed by these tailwinds, Grainger reported net sales of $15.23 billion in 2022. The top-line figure marked a 17% year-over-year increase. The company delivered adjusted earnings per share of $29.66 in 2022, up 49.5% year over year.
Earnings estimates for Grainger have also been going up over the past two months. The Zacks Consensus Estimate for 2023 bottom line has increased around 8% and the same for 2024 has moved up 7.8%. The consensus estimate for first-quarter 2023 earnings has been revised 14.6% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Other Key Picks
Some other top-ranked stocks from the Industrial Products sector are OI Glass OI, Tenaris TS and Deere & Company DE. OI and TS flaunt a Zacks Rank #1 at present, and DE has a Zacks Rank #2 (Buy).
OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 79.2% in the last year.
Tenaris has an average trailing four-quarter earnings surprise of 11.5%. The Zacks Consensus Estimate for TS’ 2023 earnings is pegged at $6.04 per share. This indicates a 39.5% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved north by 17% in the past 60 days. Its shares gained 26.1% in the last year.
The Zacks Consensus Estimate for Deere & Company’s fiscal 2023 earnings per share is pegged at $29.82, suggesting an increase of 28.1% from that reported in the last year. The consensus estimate for fiscal 2023 earnings moved 6% upward in the last 60 days. DE has a trailing four-quarter average earnings surprise of 4.7%. Its shares gained 11.6% in the last year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
O-I Glass, Inc. (OI) : Free Stock Analysis Report
Deere & Company (DE) : Free Stock Analysis Report
W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report
Tenaris S.A. (TS) : Free Stock Analysis Report
