Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at W.W. Grainger, Inc.'s (NYSE:GWW) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Were GWW's earnings stronger than its past performances and the industry?
GWW's trailing twelve-month earnings (from 30 June 2019) of US$820m has increased by 5.2% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -2.1%, indicating the rate at which GWW is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely due to an industry uplift, or if W.W. Grainger has seen some company-specific growth.
In terms of returns from investment, W.W. Grainger has invested its equity funds well leading to a 41% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 15% exceeds the US Trade Distributors industry of 5.6%, indicating W.W. Grainger has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for W.W. Grainger’s debt level, has increased over the past 3 years from 29% to 31%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While W.W. Grainger has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research W.W. Grainger to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GWW’s future growth? Take a look at our free research report of analyst consensus for GWW’s outlook.
- Financial Health: Are GWW’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at email@example.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.