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Grainger (GWW) Earnings Beat Estimates in Q3, '22 View Raised
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W.W. Grainger, Inc. (GWW - Free Report) reported earnings per share (EPS) of $8.27 in third-quarter 2022, beating the Zacks Consensus Estimate of $7.19 by a margin of 15%. The bottom line improved 46% year over year, aided by margin improvement in both High-Touch Solutions N.A. and Endless Assortment segments and strong operating performance.
Grainger’s quarterly revenues rose 17% year over year to $3,942 million. The top line surpassed the Zacks Consensus Estimate of $3,883 million. Daily sales increased 20% from the prior-year quarter.
Daily sales were up 19.4% in the High-Touch Solutions N.A. compared to the last year’s quarter due to both strong price realization and volume growth across all regions. In the Endless Assortment segment, daily sales were up 8.6% year over year driven by strong new customer acquisition and repeat business for the segment, as well as enterprise customer growth at MonotaRO.
W.W. Grainger, Inc. Price, Consensus and EPS Surprise
The cost of sales climbed 14% year over year to $2,423 million. The gross profit rose 21% year over year to $1,519 million. The gross margin expanded to 38.5% in the quarter compared with the prior-year period’s 37.1% aided by improved margin performances in both segments.
Selling, general and administrative expenses rose 13% year over year to $916 million. Grainger’s operating income in the quarter was up 38% year on year to $603 million. The operating margin came in at 15.3%, a 230 basis point expansion from the prior-year quarter.
Financial Position
The company had cash and cash equivalents of $315 million at the end of the third quarter of 2022, up from $241 million at the 2021-end. Cash flow from operating activities was $380 million in the third quarter of 2022 compared with $161 million in the last year's quarter.
Long-term debt was $2,294 million as of Sep 30, 2022, compared with $2,362 million as of Dec 31, 2021. Grainger returned $286 million to shareholders through dividends and share buybacks in the reported quarter.
2022 Outlook
Backed by the strong third-quarter performance, Grainger expects net sales for the current year between $15.1 billion and $15.2 billion, updated from its prior stated range of $15 billion to $15.2 billion. The company raised its earnings per share guidance to the band of $29.10 - $29.70 from its previous expectation of $27.25-$28.75.
Price Performance
Image Source: Zacks Investment Research
In the past year, Grainger’s shares have gained 24.8% against the industry’s decline of 25.7%.
Zacks Rank and Stocks to Consider
Grainger currently carries a Zacks Rank #3 (Hold).
Tenaris delivered a trailing four-quarter earnings surprise of 34%, on average. The Zacks Consensus Estimate for the company for 2022 indicates year-over-year growth of around 120%. The estimate has moved up 3% in the past 60 days. The TS stock has risen 38% in the past year.
Enerpac Tool delivered a four-quarter earnings surprise of 3.4%, on average. EPAC’s earnings estimates have increased 9% for fiscal 2023 (ending August 2023) in the past 60 days. The estimate indicates year-over-year growth of 44.6%. EPAC’s shares have gained 27.1% in the past year.
Reliance Steel & Aluminum’s earnings surprise in the last four quarters was 13.4%, on average. It has an expected earnings growth rate of 27.9% for fiscal 2022. The earnings estimates have moved up 0.1% over the past 60 days. The RS stock has gained 26% in the past year.
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Grainger (GWW) Earnings Beat Estimates in Q3, '22 View Raised
W.W. Grainger, Inc. (GWW - Free Report) reported earnings per share (EPS) of $8.27 in third-quarter 2022, beating the Zacks Consensus Estimate of $7.19 by a margin of 15%. The bottom line improved 46% year over year, aided by margin improvement in both High-Touch Solutions N.A. and Endless Assortment segments and strong operating performance.
Grainger’s quarterly revenues rose 17% year over year to $3,942 million. The top line surpassed the Zacks Consensus Estimate of $3,883 million. Daily sales increased 20% from the prior-year quarter.
Daily sales were up 19.4% in the High-Touch Solutions N.A. compared to the last year’s quarter due to both strong price realization and volume growth across all regions. In the Endless Assortment segment, daily sales were up 8.6% year over year driven by strong new customer acquisition and repeat business for the segment, as well as enterprise customer growth at MonotaRO.
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
The cost of sales climbed 14% year over year to $2,423 million. The gross profit rose 21% year over year to $1,519 million. The gross margin expanded to 38.5% in the quarter compared with the prior-year period’s 37.1% aided by improved margin performances in both segments.
Selling, general and administrative expenses rose 13% year over year to $916 million. Grainger’s operating income in the quarter was up 38% year on year to $603 million. The operating margin came in at 15.3%, a 230 basis point expansion from the prior-year quarter.
Financial Position
The company had cash and cash equivalents of $315 million at the end of the third quarter of 2022, up from $241 million at the 2021-end. Cash flow from operating activities was $380 million in the third quarter of 2022 compared with $161 million in the last year's quarter.
Long-term debt was $2,294 million as of Sep 30, 2022, compared with $2,362 million as of Dec 31, 2021. Grainger returned $286 million to shareholders through dividends and share buybacks in the reported quarter.
2022 Outlook
Backed by the strong third-quarter performance, Grainger expects net sales for the current year between $15.1 billion and $15.2 billion, updated from its prior stated range of $15 billion to $15.2 billion. The company raised its earnings per share guidance to the band of $29.10 - $29.70 from its previous expectation of $27.25-$28.75.
Price Performance
Image Source: Zacks Investment Research
In the past year, Grainger’s shares have gained 24.8% against the industry’s decline of 25.7%.
Zacks Rank and Stocks to Consider
Grainger currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Tenaris (TS - Free Report) , Enerpac Tool Group Corp. (EPAC - Free Report) and Reliance Steel & Aluminum Co. (RS - Free Report) . While TS and EPAC sport a Zacks Rank #1 (Strong Buy), RS carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
Tenaris delivered a trailing four-quarter earnings surprise of 34%, on average. The Zacks Consensus Estimate for the company for 2022 indicates year-over-year growth of around 120%. The estimate has moved up 3% in the past 60 days. The TS stock has risen 38% in the past year.
Enerpac Tool delivered a four-quarter earnings surprise of 3.4%, on average. EPAC’s earnings estimates have increased 9% for fiscal 2023 (ending August 2023) in the past 60 days. The estimate indicates year-over-year growth of 44.6%. EPAC’s shares have gained 27.1% in the past year.
Reliance Steel & Aluminum’s earnings surprise in the last four quarters was 13.4%, on average. It has an expected earnings growth rate of 27.9% for fiscal 2022. The earnings estimates have moved up 0.1% over the past 60 days. The RS stock has gained 26% in the past year.