Stock of the Day

June 1, 2021

W.W. Grainger (GWW)

$1,008.08
-$16.23 (-1.6%)
Market Cap: $49.88B

About W.W. Grainger

W.W. Grainger, Inc., together with its subsidiaries, distributes maintenance, repair, and operating products and services primarily in North America, Japan, the United Kingdom, and internationally. The company operates through two segments, High-Touch Solutions N.A. and Endless Assortment. The company provides safety, security, material handling and storage equipment, pumps and plumbing equipment, cleaning and maintenance, and metalworking and hand tools. It also offers technical support and inventory management services. The company serves smaller businesses to large corporations, government entities, and other institutions, as well as commercial, healthcare, and manufacturing industries through sales and service representatives, and electronic and ecommerce channels. W.W. Grainger, Inc. was founded in 1927 and is headquartered in Lake Forest, Illinois.

W.W. Grainger Bull Case

Here are some ways that investors could benefit from investing in W.W. Grainger, Inc.:

  • W.W. Grainger, Inc. reported a strong return on equity of 52.43%, indicating effective management and profitability relative to shareholder equity, which can attract investors looking for efficient capital use.
  • The company has a solid net margin of 11.12%, suggesting that it retains a good portion of revenue as profit, which is a positive indicator for potential earnings growth.
  • W.W. Grainger, Inc. recently declared a quarterly dividend of $2.05, translating to an annualized dividend of $8.20 and a yield of 0.80%. This consistent dividend payment can appeal to income-focused investors.
  • Analysts project earnings per share (EPS) of 40.3 for the current fiscal year, reflecting expected growth in profitability, which can enhance investor confidence in the company's future performance.
  • The current stock price is around $1,148.56, which is within the average target price set by analysts, indicating that the stock may be fairly valued and could present a stable investment opportunity.

W.W. Grainger Bear Case

Investors should be bearish about investing in W.W. Grainger, Inc. for these reasons:

  • The company missed its latest earnings estimate by $0.04, which may raise concerns about its ability to meet future expectations and could lead to volatility in stock performance.
  • Several analysts have downgraded their ratings on W.W. Grainger, Inc., with a notable shift from "buy" to "hold," indicating a more cautious outlook that could deter potential investors.
  • The stock has a relatively low dividend payout ratio of 21.18%, which may suggest that the company is retaining a significant portion of its earnings for reinvestment rather than returning it to shareholders, potentially limiting immediate returns.
  • Market sentiment may be affected by the overall economic conditions, and any downturn could impact W.W. Grainger, Inc.'s performance, especially given its reliance on industrial and maintenance products.
  • With a consensus rating of "Hold," the stock may not present a compelling case for aggressive investment, as it suggests that analysts are not overwhelmingly bullish on its near-term prospects.

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