WW GRAINGER INC (GWW) Stock Fundamental Analysis
NYSE:GWW - New York Stock Exchange, Inc. - US3848021040 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to GWW. GWW was compared to 49 industry peers in the Trading Companies & Distributors industry. GWW gets an excellent profitability rating and is at the same time showing great financial health properties. While showing a medium growth rate, GWW is valued expensive at the moment. These ratings would make GWW suitable for quality investing!
1. Profitability
1.1 Basic Checks
In the past year GWW was profitable.
GWW had a positive operating cash flow in the past year.
GWW had positive earnings in each of the past 5 years.
GWW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 22.06%, GWW belongs to the top of the industry, outperforming 97.96% of the companies in the same industry.
GWW has a Return On Equity of 54.89%. This is amongst the best in the industry. GWW outperforms 93.88% of its industry peers.
The Return On Invested Capital of GWW (30.61%) is better than 100.00% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for GWW is significantly above the industry average of 9.84%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 22.06% | ||
| ROE | 54.89% | ||
| ROIC | 30.61% |
ROA(3y)21.49%
ROA(5y)18.26%
ROE(3y)59.66%
ROE(5y)54.53%
ROIC(3y)30.88%
ROIC(5y)27.39%
1.3 Margins
GWW's Profit Margin of 11.08% is amongst the best of the industry. GWW outperforms 83.67% of its industry peers.
GWW's Profit Margin has improved in the last couple of years.
GWW has a better Operating Margin (15.41%) than 77.55% of its industry peers.
In the last couple of years the Operating Margin of GWW has grown nicely.
GWW has a better Gross Margin (39.45%) than 71.43% of its industry peers.
In the last couple of years the Gross Margin of GWW has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.41% | ||
| PM (TTM) | 11.08% | ||
| GM | 39.45% |
OM growth 3Y9.16%
OM growth 5Y5.04%
PM growth 3Y11.56%
PM growth 5Y8.51%
GM growth 3Y2.79%
GM growth 5Y0.56%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), GWW is creating value.
The number of shares outstanding for GWW has been reduced compared to 1 year ago.
The number of shares outstanding for GWW has been reduced compared to 5 years ago.
The debt/assets ratio for GWW is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 11.61 indicates that GWW is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 11.61, GWW belongs to the top of the industry, outperforming 95.92% of the companies in the same industry.
GWW has a debt to FCF ratio of 1.47. This is a very positive value and a sign of high solvency as it would only need 1.47 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 1.47, GWW is doing good in the industry, outperforming 77.55% of the companies in the same industry.
GWW has a Debt/Equity ratio of 0.65. This is a neutral value indicating GWW is somewhat dependend on debt financing.
GWW's Debt to Equity ratio of 0.65 is in line compared to the rest of the industry. GWW outperforms 51.02% of its industry peers.
Although GWW does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.65 | ||
| Debt/FCF | 1.47 | ||
| Altman-Z | 11.61 |
ROIC/WACC3.08
WACC9.95%
2.3 Liquidity
GWW has a Current Ratio of 2.74. This indicates that GWW is financially healthy and has no problem in meeting its short term obligations.
GWW has a Current ratio of 2.74. This is in the better half of the industry: GWW outperforms 71.43% of its industry peers.
GWW has a Quick Ratio of 1.60. This is a normal value and indicates that GWW is financially healthy and should not expect problems in meeting its short term obligations.
GWW has a better Quick ratio (1.60) than 71.43% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.74 | ||
| Quick Ratio | 1.6 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 6.93% over the past year.
Measured over the past years, GWW shows a quite strong growth in Earnings Per Share. The EPS has been growing by 17.64% on average per year.
Looking at the last year, GWW shows a small growth in Revenue. The Revenue has grown by 3.71% in the last year.
GWW shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 8.37% yearly.
EPS 1Y (TTM)6.93%
EPS 3Y25.23%
EPS 5Y17.64%
EPS Q2Q%2.49%
Revenue 1Y (TTM)3.71%
Revenue growth 3Y9.65%
Revenue growth 5Y8.37%
Sales Q2Q%1.68%
3.2 Future
The Earnings Per Share is expected to grow by 9.65% on average over the next years. This is quite good.
GWW is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.02% yearly.
EPS Next Y5%
EPS Next 2Y7.59%
EPS Next 3Y8.46%
EPS Next 5Y9.65%
Revenue Next Year4.34%
Revenue Next 2Y5.5%
Revenue Next 3Y6%
Revenue Next 5Y7.02%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 26.80, the valuation of GWW can be described as expensive.
Compared to the rest of the industry, the Price/Earnings ratio of GWW is on the same level as its industry peers.
GWW is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.45, which is the current average of the S&P500 Index.
GWW is valuated rather expensively with a Price/Forward Earnings ratio of 23.29.
GWW's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. GWW is more expensive than 61.22% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.90. GWW is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.8 | ||
| Fwd PE | 23.29 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, GWW is valued a bit more expensive than the industry average as 61.22% of the companies are valued more cheaply.
The rest of the industry has a similar Price/Free Cash Flow ratio as GWW.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 32.58 | ||
| EV/EBITDA | 17.97 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates GWW does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of GWW may justify a higher PE ratio.
PEG (NY)5.36
PEG (5Y)1.52
EPS Next 2Y7.59%
EPS Next 3Y8.46%
5. Dividend
5.1 Amount
With a yearly dividend of 0.89%, GWW is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 2.99, GWW has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.42, GWW's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.89% |
5.2 History
The dividend of GWW is nicely growing with an annual growth rate of 7.57%!
GWW has been paying a dividend for at least 10 years, so it has a reliable track record.
GWW has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)7.57%
Div Incr Years34
Div Non Decr Years34
5.3 Sustainability
GWW pays out 22.57% of its income as dividend. This is a sustainable payout ratio.
The dividend of GWW is growing, but earnings are growing more, so the dividend growth is sustainable.
DP22.57%
EPS Next 2Y7.59%
EPS Next 3Y8.46%
1050.49
+15.21 (+1.47%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners73.83%
Inst Owner Change1.48%
Ins Owners6.08%
Ins Owner Change0.58%
Market Cap50.47B
Analysts66.96
Price Target1102.11 (4.91%)
Short Float %2.57%
Short Ratio4.84
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.89% |
Yearly Dividend8.62
Dividend Growth(5Y)7.57%
DP22.57%
Div Incr Years34
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.77%
Min EPS beat(2)-1.35%
Max EPS beat(2)2.89%
EPS beat(4)2
Avg EPS beat(4)0.1%
Min EPS beat(4)-1.99%
Max EPS beat(4)2.89%
EPS beat(8)5
Avg EPS beat(8)0.88%
EPS beat(12)9
Avg EPS beat(12)3.3%
EPS beat(16)12
Avg EPS beat(16)3.38%
Revenue beat(2)0
Avg Revenue beat(2)-1.24%
Min Revenue beat(2)-1.24%
Max Revenue beat(2)-1.24%
Revenue beat(4)0
Avg Revenue beat(4)-1.39%
Min Revenue beat(4)-1.8%
Max Revenue beat(4)-1.24%
Revenue beat(8)0
Avg Revenue beat(8)-1.48%
Revenue beat(12)2
Avg Revenue beat(12)-0.77%
Revenue beat(16)5
Avg Revenue beat(16)-0.32%
PT rev (1m)2.65%
PT rev (3m)-1.04%
EPS NQ rev (1m)0.17%
EPS NQ rev (3m)-1.05%
EPS NY rev (1m)0.09%
EPS NY rev (3m)0.31%
Revenue NQ rev (1m)0.07%
Revenue NQ rev (3m)0.33%
Revenue NY rev (1m)0.06%
Revenue NY rev (3m)-0.1%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.8 | ||
| Fwd PE | 23.29 | ||
| P/S | 2.93 | ||
| P/FCF | 32.58 | ||
| P/OCF | 24.08 | ||
| P/B | 14.5 | ||
| P/tB | 17.55 | ||
| EV/EBITDA | 17.97 |
EPS(TTM)39.2
EY3.73%
EPS(NY)45.1
Fwd EY4.29%
FCF(TTM)32.24
FCFY3.07%
OCF(TTM)43.63
OCFY4.15%
SpS358.85
BVpS72.44
TBVpS59.85
PEG (NY)5.36
PEG (5Y)1.52
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 22.06% | ||
| ROE | 54.89% | ||
| ROCE | 39.99% | ||
| ROIC | 30.61% | ||
| ROICexc | 34.03% | ||
| ROICexgc | 37.86% | ||
| OM | 15.41% | ||
| PM (TTM) | 11.08% | ||
| GM | 39.45% | ||
| FCFM | 8.99% |
ROA(3y)21.49%
ROA(5y)18.26%
ROE(3y)59.66%
ROE(5y)54.53%
ROIC(3y)30.88%
ROIC(5y)27.39%
ROICexc(3y)34.68%
ROICexc(5y)30.48%
ROICexgc(3y)38.97%
ROICexgc(5y)34.58%
ROCE(3y)40.34%
ROCE(5y)35.78%
ROICexcg growth 3Y13.79%
ROICexcg growth 5Y5.15%
ROICexc growth 3Y14.65%
ROICexc growth 5Y6.97%
OM growth 3Y9.16%
OM growth 5Y5.04%
PM growth 3Y11.56%
PM growth 5Y8.51%
GM growth 3Y2.79%
GM growth 5Y0.56%
F-Score8
Asset Turnover1.99
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.65 | ||
| Debt/FCF | 1.47 | ||
| Debt/EBITDA | 0.79 | ||
| Cap/Depr | 226.03% | ||
| Cap/Sales | 3.17% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 72.33% | ||
| Profit Quality | 81.1% | ||
| Current Ratio | 2.74 | ||
| Quick Ratio | 1.6 | ||
| Altman-Z | 11.61 |
F-Score8
WACC9.95%
ROIC/WACC3.08
Cap/Depr(3y)184.73%
Cap/Depr(5y)160.05%
Cap/Sales(3y)2.51%
Cap/Sales(5y)2.23%
Profit Quality(3y)79.52%
Profit Quality(5y)87.44%
High Growth Momentum
Growth
EPS 1Y (TTM)6.93%
EPS 3Y25.23%
EPS 5Y17.64%
EPS Q2Q%2.49%
EPS Next Y5%
EPS Next 2Y7.59%
EPS Next 3Y8.46%
EPS Next 5Y9.65%
Revenue 1Y (TTM)3.71%
Revenue growth 3Y9.65%
Revenue growth 5Y8.37%
Sales Q2Q%1.68%
Revenue Next Year4.34%
Revenue Next 2Y5.5%
Revenue Next 3Y6%
Revenue Next 5Y7.02%
EBIT growth 1Y2.95%
EBIT growth 3Y19.7%
EBIT growth 5Y13.83%
EBIT Next Year11.91%
EBIT Next 3Y9.6%
EBIT Next 5Y8.54%
FCF growth 1Y35.05%
FCF growth 3Y32.04%
FCF growth 5Y13.84%
OCF growth 1Y45.15%
OCF growth 3Y31.09%
OCF growth 5Y15.17%