Grainger (GWW) Set to Report Q2 Earnings: What's in Store?
W.W. Grainger, Inc. GWW is scheduled to report second-quarter 2023 results on Jul 27, before the opening bell.
Q2 Estimates
The Zacks Consensus Estimate for GWW’s second-quarter revenues is pegged at $4.2 billion, indicating growth of 9.2% from the year-ago quarter’s reported figure. Organic growth for the quarter is expected to be 9.5%. The consensus mark for earnings per share is pegged at $8.96, suggesting an improvement of 24.6% from the prior-year quarter. Earnings estimates have moved 0.2% north in the past 60 days.
W.W. Grainger, Inc. Price and EPS Surprise
W.W. Grainger, Inc. price-eps-surprise | W.W. Grainger, Inc. Quote
Q1 Results
In the last reported quarter, Grainger’s earnings and revenues beat the Zacks Consensus Estimate and increased year over year. GWW has an impressive earnings surprise history, having surpassed each of the trailing four quarters, the average beat being 9.1%.
What the Zacks Model Indicates
Our proven model doesn’t conclusively predict an earnings beat for Grainger this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.
Earnings ESP: Grainger has an Earnings ESP of -2.88%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Factors to Note
Grainger has been witnessing strong growth in core and non-pandemic product sales for the past few quarters. The company’s product mix has been stabilizing, as customers have been returning to normal operations post-pandemic.
Also, GWW has been focused on improving the end-to-end customer experience by making investments in its e-commerce and digital capabilities, and executing improvement initiatives within its supply chain. These factors are likely to have contributed to the company’s second-quarter performance. We expect an organic daily sales growth of 8.8% in the quarter.
Grainger’s High-Touch Solutions North America segment is expected to have benefited from strength in commercial, transportation and heavy manufacturing, strong revenue growth across the company’s North American regions, and an expansion in large and midsize customers. Our model predicts year-over-year organic daily sales growth of 6.2% in the quarter.
Notably, Grainger has been witnessing market-beating growth in the High-Touch Solutions market compared with the U.S. MRO (maintenance, repair and operating) market. This outperformance can be attributed to strategic activities, such as building advantaged MRO solutions, delivering unparalleled customer services, and offering differentiated sales and services.
We expect the segment’s revenues to be $3,242 million, up 6.2% from the second quarter of 2022 reported level.
GWW’s Endless Assortment segment is likely to have benefited from strong customer acquisition and repeat business in the quarter to be reported. Our model predicts year-over-year organic daily sales growth of 20.8% in the quarter.
Customer growth at MonotaRO is expected to have positively impacted the segment’s revenues. Our model predicts the segment’s revenues to be $868 million, up 20.8% from the prior-year quarter’s reported figure.
However, the company has been witnessing elevated material and freight costs for some time. This, coupled with higher operating costs and incremental SG&A expenses due to higher technology investments, is likely to have impacted its margins in the quarter under review. We expect SG&A expenses to be up 24% year over year in the quarter.
Nonetheless, its pricing actions are anticipated to have offset some negative impacts.
Price Performance
Grainger shares have improved 61.9% in a year compared with the industry’s growth of 31.1%.
Image Source: Zacks Investment Research
Stocks to Consider
Here are some stocks with the right combination of elements to post an earnings beat in their upcoming releases.
EnerSys ENS, expected to release earnings soon, has an Earnings ESP of +8.32% and sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ENS’ fiscal first-quarter earnings is pegged at $1.64 per share, suggesting a year-over-year improvement of 42.6%. The company has a trailing four-quarter surprise of 9%, on average.
AptarGroup, Inc. ATR, scheduled to release earnings on Jul 27, has an Earnings ESP of +1.77% and a Zacks Rank of 2.
The Zacks Consensus Estimate for ATR’s earnings for the second quarter is pegged at $1.13 per share. The company has a trailing four-quarter surprise of 6.4%, on average.
Eaton Corporation plc ETN, expected to release earnings shortly, has an Earnings ESP of +0.18% and a Zacks Rank of 3.
The consensus estimate for ETN’s earnings for the second quarter is pegged at $2.11 per share. The company has a trailing four-quarter surprise of 2.5%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report
AptarGroup, Inc. (ATR) : Free Stock Analysis Report
Enersys (ENS) : Free Stock Analysis Report
