WW GRAINGER INC (GWW) Stock Fundamental Analysis
NYSE:GWW - New York Stock Exchange, Inc. - US3848021040 - Common Stock - Currency: USD
Taking everything into account, GWW scores 6 out of 10 in our fundamental rating. GWW was compared to 48 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.
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
GWW's Return On Assets of 22.06% is amongst the best of the industry. GWW outperforms 97.92% of its industry peers.
With an excellent Return On Equity value of 54.89%, GWW belongs to the best of the industry, outperforming 93.75% of the companies in the same industry.
The Return On Invested Capital of GWW (30.61%) is better than 100.00% of its industry peers.
GWW had an Average Return On Invested Capital over the past 3 years of 30.88%. This is significantly above the industry average of 9.18%.
| 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
The Profit Margin of GWW (11.08%) is better than 81.25% of its industry peers.
In the last couple of years the Profit Margin of GWW has grown nicely.
With a decent Operating Margin value of 15.41%, GWW is doing good in the industry, outperforming 77.08% of the companies in the same industry.
GWW's Operating Margin has improved in the last couple of years.
GWW's Gross Margin of 39.45% is fine compared to the rest of the industry. GWW outperforms 68.75% of its industry peers.
GWW's Gross Margin has been stable in the last couple of years.
| 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.
GWW has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 11.86 indicates that GWW is not in any danger for bankruptcy at the moment.
GWW has a better Altman-Z score (11.86) than 93.75% of its industry peers.
The Debt to FCF ratio of GWW is 1.47, which is an excellent value as it means it would take GWW, only 1.47 years of fcf income to pay off all of its debts.
GWW has a better Debt to FCF ratio (1.47) than 81.25% of its industry peers.
GWW has a Debt/Equity ratio of 0.65. This is a neutral value indicating GWW is somewhat dependend on debt financing.
GWW has a Debt to Equity ratio (0.65) which is in line with its industry peers.
Even though the debt/equity ratio score it not favorable for GWW, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.65 | ||
| Debt/FCF | 1.47 | ||
| Altman-Z | 11.86 |
ROIC/WACC3.1
WACC9.88%
2.3 Liquidity
A Current Ratio of 2.74 indicates that GWW has no problem at all paying its short term obligations.
GWW has a better Current ratio (2.74) than 72.92% 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's Quick ratio of 1.60 is fine compared to the rest of the industry. GWW outperforms 70.83% 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.
GWW shows a small growth in Revenue. In the last year, the Revenue has grown by 3.71%.
Measured over the past years, GWW shows a quite strong growth in Revenue. The Revenue has been growing by 8.37% on average per year.
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 8.68% on average over the next years. This is quite good.
Based on estimates for the next years, GWW will show a small growth in Revenue. The Revenue will grow by 6.01% on average per year.
EPS Next Y4.91%
EPS Next 2Y7.5%
EPS Next 3Y8.53%
EPS Next 5Y8.68%
Revenue Next Year4.28%
Revenue Next 2Y5.38%
Revenue Next 3Y6.02%
Revenue Next 5Y6.01%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 27.85, the valuation of GWW can be described as expensive.
The rest of the industry has a similar Price/Earnings ratio as GWW.
The average S&P500 Price/Earnings ratio is at 26.60. GWW is around the same levels.
A Price/Forward Earnings ratio of 24.24 indicates a rather expensive valuation of GWW.
GWW's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. GWW is more expensive than 60.42% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.43, GWW is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.85 | ||
| Fwd PE | 24.24 |
4.2 Price Multiples
GWW's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. GWW is more expensive than 72.92% of the companies in the same industry.
GWW's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 33.94 | ||
| EV/EBITDA | 18.7 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of GWW may justify a higher PE ratio.
PEG (NY)5.67
PEG (5Y)1.58
EPS Next 2Y7.5%
EPS Next 3Y8.53%
5. Dividend
5.1 Amount
With a yearly dividend of 0.83%, GWW is not a good candidate for dividend investing.
GWW's Dividend Yield is comparable with the industry average which is at 2.68.
Compared to an average S&P500 Dividend Yield of 2.36, GWW's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.83% |
5.2 History
On average, the dividend of GWW grows each year by 7.57%, which is quite nice.
GWW has been paying a dividend for at least 10 years, so it has a reliable track record.
GWW has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)7.57%
Div Incr Years34
Div Non Decr Years34
5.3 Sustainability
22.57% of the earnings are spent on dividend by GWW. This is a low number and sustainable payout ratio.
GWW's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP22.57%
EPS Next 2Y7.5%
EPS Next 3Y8.53%
1091.53
-8.88 (-0.81%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners73.25%
Inst Owner Change1.4%
Ins Owners6.02%
Ins Owner Change0.83%
Market Cap52.58B
Analysts66.09
Price Target1073.63 (-1.64%)
Short Float %2.65%
Short Ratio4.12
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.83% |
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)-1.81%
PT rev (3m)-4.86%
EPS NQ rev (1m)-1.25%
EPS NQ rev (3m)-1.2%
EPS NY rev (1m)0.13%
EPS NY rev (3m)0.24%
Revenue NQ rev (1m)0.13%
Revenue NQ rev (3m)0.24%
Revenue NY rev (1m)-0.24%
Revenue NY rev (3m)-0.56%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.85 | ||
| Fwd PE | 24.24 | ||
| P/S | 3.05 | ||
| P/FCF | 33.94 | ||
| P/OCF | 25.09 | ||
| P/B | 15.11 | ||
| P/tB | 18.29 | ||
| EV/EBITDA | 18.7 |
EPS(TTM)39.2
EY3.59%
EPS(NY)45.02
Fwd EY4.12%
FCF(TTM)32.16
FCFY2.95%
OCF(TTM)43.51
OCFY3.99%
SpS357.88
BVpS72.24
TBVpS59.68
PEG (NY)5.67
PEG (5Y)1.58
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 | 11.86 |
F-Score8
WACC9.88%
ROIC/WACC3.1
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 Y4.91%
EPS Next 2Y7.5%
EPS Next 3Y8.53%
EPS Next 5Y8.68%
Revenue 1Y (TTM)3.71%
Revenue growth 3Y9.65%
Revenue growth 5Y8.37%
Sales Q2Q%1.68%
Revenue Next Year4.28%
Revenue Next 2Y5.38%
Revenue Next 3Y6.02%
Revenue Next 5Y6.01%
EBIT growth 1Y2.95%
EBIT growth 3Y19.7%
EBIT growth 5Y13.83%
EBIT Next Year12.1%
EBIT Next 3Y9.65%
EBIT Next 5Y7.24%
FCF growth 1Y35.05%
FCF growth 3Y32.04%
FCF growth 5Y13.84%
OCF growth 1Y45.15%
OCF growth 3Y31.09%
OCF growth 5Y15.17%