WW GRAINGER INC (GWW) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:GWW - US3848021040 - Common Stock
1070.01 USD
+12.45 (+1.18%)
1070.01 USD
0 (0%)
We assign a fundamental rating of 6 out of 10 to GWW. GWW was compared to 50 industry peers in the Trading Companies & Distributors industry. GWW has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. 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.
- In the past year GWW had a positive cash flow from operations.
- In the past 5 years GWW has always been profitable.
- Each year in the past 5 years GWW had a positive operating cash flow.
1.2 Ratios
- GWW's Return On Assets of 19.55% is amongst the best of the industry. GWW outperforms 98.00% of its industry peers.
- GWW's Return On Equity of 48.58% is amongst the best of the industry. GWW outperforms 94.00% of its industry peers.
- GWW's Return On Invested Capital of 27.94% is amongst the best of the industry. GWW outperforms 98.00% 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 9.64%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 19.55% | ||
| ROE | 48.58% | ||
| ROIC | 27.94% |
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
- Looking at the Profit Margin, with a value of 9.75%, GWW is in the better half of the industry, outperforming 78.00% of the companies in the same industry.
- GWW's Profit Margin has improved in the last couple of years.
- Looking at the Operating Margin, with a value of 14.05%, GWW is in the better half of the industry, outperforming 76.00% of the companies in the same industry.
- In the last couple of years the Operating Margin of GWW has grown nicely.
- Looking at the Gross Margin, with a value of 39.09%, GWW is in the better half of the industry, outperforming 74.00% of the companies in the same industry.
- GWW's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14.05% | ||
| PM (TTM) | 9.75% | ||
| GM | 39.09% |
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.
- GWW has less shares outstanding than it did 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
- GWW has an Altman-Z score of 11.42. This indicates that GWW is financially healthy and has little risk of bankruptcy at the moment.
- Looking at the Altman-Z score, with a value of 11.42, GWW belongs to the top of the industry, outperforming 98.00% of the companies in the same industry.
- GWW has a debt to FCF ratio of 1.92. This is a very positive value and a sign of high solvency as it would only need 1.92 years to pay back of all of its debts.
- With an excellent Debt to FCF ratio value of 1.92, GWW belongs to the best of the industry, outperforming 82.00% of the companies in the same industry.
- A Debt/Equity ratio of 0.66 indicates that GWW is somewhat dependend on debt financing.
- GWW has a Debt to Equity ratio (0.66) which is comparable to the rest of the industry.
- 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 | 0.66 | ||
| Debt/FCF | 1.92 | ||
| Altman-Z | 11.42 |
ROIC/WACC2.89
WACC9.68%
2.3 Liquidity
- A Current Ratio of 2.72 indicates that GWW has no problem at all paying its short term obligations.
- GWW's Current ratio of 2.72 is fine compared to the rest of the industry. GWW outperforms 72.00% of its industry peers.
- GWW has a Quick Ratio of 1.59. 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 1.59 is fine compared to the rest of the industry. GWW outperforms 62.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.72 | ||
| Quick Ratio | 1.59 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 5.77% over the past year.
- GWW shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 17.64% yearly.
- The Revenue has been growing slightly by 4.83% in the past year.
- The Revenue has been growing by 8.37% on average over the past years. This is quite good.
EPS 1Y (TTM)5.77%
EPS 3Y25.23%
EPS 5Y17.64%
EPS Q2Q%3.44%
Revenue 1Y (TTM)4.83%
Revenue growth 3Y9.65%
Revenue growth 5Y8.37%
Sales Q2Q%6.13%
3.2 Future
- GWW is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.39% yearly.
- Based on estimates for the next years, GWW will show a small growth in Revenue. The Revenue will grow by 6.65% on average per year.
EPS Next Y2.44%
EPS Next 2Y6.67%
EPS Next 3Y8.1%
EPS Next 5Y9.39%
Revenue Next Year4.32%
Revenue Next 2Y4.72%
Revenue Next 3Y5.3%
Revenue Next 5Y6.65%
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.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 26.92, GWW can be considered very expensive at the moment.
- GWW's Price/Earnings is on the same level as the industry average.
- GWW is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.60, which is the current average of the S&P500 Index.
- GWW is valuated rather expensively with a Price/Forward Earnings ratio of 24.14.
- GWW's Price/Forward Earnings is on the same level as the industry average.
- When comparing the Price/Forward Earnings ratio of GWW to the average of the S&P500 Index (25.83), we can say GWW is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.92 | ||
| Fwd PE | 24.14 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of GWW is on the same level as its industry peers.
- 62.00% of the companies in the same industry are more expensive than GWW, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 41.3 | ||
| EV/EBITDA | 18.98 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- GWW has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)11.02
PEG (5Y)1.53
EPS Next 2Y6.67%
EPS Next 3Y8.1%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.85%, GWW is not a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 1.31, GWW pays a bit more dividend than its industry peers.
- With a Dividend Yield of 0.85, GWW pays less dividend than the S&P500 average, which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.85% |
5.2 History
- On average, the dividend of GWW grows each year by 7.57%, which is quite nice.
- GWW has paid a dividend for at least 10 years, which is 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
- 26.47% of the earnings are spent on dividend by GWW. This is a low number and sustainable payout ratio.
- The dividend of GWW is growing, but earnings are growing more, so the dividend growth is sustainable.
DP26.47%
EPS Next 2Y6.67%
EPS Next 3Y8.1%
WW GRAINGER INC / GWW FAQ
Can you provide the ChartMill fundamental rating for WW GRAINGER INC?
ChartMill assigns a fundamental rating of 6 / 10 to GWW.
What is the valuation status for GWW stock?
ChartMill assigns a valuation rating of 3 / 10 to WW GRAINGER INC (GWW). This can be considered as Overvalued.
What is the profitability of GWW stock?
WW GRAINGER INC (GWW) has a profitability rating of 8 / 10.
How financially healthy is WW GRAINGER INC?
The financial health rating of WW GRAINGER INC (GWW) is 8 / 10.
Can you provide the expected EPS growth for GWW stock?
The Earnings per Share (EPS) of WW GRAINGER INC (GWW) is expected to grow by 2.44% in the next year.