Here's How Much You'd Have If You Invested $1000 in W.W. Grainger a Decade Ago
For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in W.W. Grainger (GWW) ten years ago? It may not have been easy to hold on to GWW for all that time, but if you did, how much would your investment be worth today?
W.W. Grainger's Business In-Depth
With that in mind, let's take a look at W.W. Grainger's main business drivers.
Incorporated in 1928, IL-based W.W. Grainger Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services. Its operations are primarily in North America, Japan and the U.K. Its customers represent a wide array of industries including government, manufacturing, transportation, commercial and contractors. Its products include material-handling equipment, safety and security supplies, lighting and electrical products, power and hand tools, pumps and plumbing supplies, cleaning and maintenance supplies, and metalworking tools.
With effect from Jan 1, 2021, Grainger has two reportable segments — High-Touch Solutions (N.A.) and Endless Assortment. The company had announced the change to align with its go-to-market strategies and bifurcated business models (high-touch solutions and endless assortment).
The High-Touch Solutions (N.A.) segment provides value-added MRO solutions that are rooted in deep product knowledge and customer expertise. It includes the Grainger-branded businesses in the United States, Canada, Mexico and Puerto Rico. The segment generated around 79% of Grainger’s total revenues, per the company’s restated statements.
The Endless Assortment segment provides a simple, transparent and streamlined experience for customers to shop millions of products online. This segment includes the company’s Zoro Tools, Inc. (Zoro) businesses in the United States and the U.K., and MonotaRO Co., Ltd. (MonotaRO), which operates predominately in Japan. The segment generated around 17% of the company’s total revenues, per Grainger’s restated statements. Zoro.com attained $1 billion annual sales through its U.S. website for the first time in 2022.
The remaining international high-touch solutions businesses, operating primarily in the U.K., are classified as “Other”. The segment generated around 18% of the company’s total revenues, as per the company’s restated statements.
In sync with Grainger’s strategic focus on broad line MRO distribution in key markets, the company divested the Fabory high-touch solutions business in June 2020. Subsequently, in August 2020, it divested the China high-touch solutions business and in Novem
Bottom Line
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in W.W. Grainger ten years ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in February 2014 would be worth $3,844.41, or a 284.44% gain, as of February 23, 2024. Investors should keep in mind that this return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 177.03% and gold's return of 47.01% over the same time frame.
Going forward, analysts are expecting more upside for GWW.
Grainger has been gaining from volume growth in the High Touch Solutions segment and customer growth in the Endless Assortment segment. Backed by a solid 2023 performance, the company anticipates earnings per share of $38.00-$40.50. The guidance indicates year-over-year growth of 39.3% at the mid-point. The company projects net sales between $17.2 billion and $17.7 billion for the year. Total daily sales growth is expected to be 4.3-7.3%, backed by the ongoing momentum in both segments. Grainger’s initiatives to manage inventory effectively, as well as its investments in e-commerce and digital capabilities, will drive profitability. Moreover, gains from an improved product mix and price-control efforts are helping the company’s growth. However, Grainger has been witnessing product shortages and delays. Elevated costs are also worrisome.
Shares have gained 8.70% over the past four weeks and there have been 6 higher earnings estimate revisions for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.
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W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report
