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. GWW is valied quite expensively at the moment, while it does show a decent growth rate. These ratings could make GWW a good candidate for quality investing.
1. Profitability
1.1 Basic Checks
GWW had positive earnings in the past year.
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 22.06% is amongst the best of the industry. GWW outperforms 97.96% of its industry peers.
With an excellent Return On Equity value of 54.89%, GWW belongs to the best of the industry, outperforming 93.88% of the companies in the same industry.
GWW's Return On Invested Capital of 30.61% is amongst the best of the industry. GWW outperforms 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
With an excellent Profit Margin value of 11.08%, GWW belongs to the best of the industry, outperforming 83.67% of the companies in the same industry.
In the last couple of years the Profit Margin of GWW has grown nicely.
GWW's Operating Margin of 15.41% is fine compared to the rest of the industry. GWW outperforms 77.55% of its industry peers.
GWW's Operating Margin has improved in the last couple of years.
GWW has a better Gross Margin (39.45%) than 71.43% 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
GWW has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it 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
GWW has an Altman-Z score of 11.61. This indicates that GWW is financially healthy and has little risk of bankruptcy at the moment.
GWW has a Altman-Z score of 11.61. This is amongst the best in the industry. GWW outperforms 95.92% of its industry peers.
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.
Looking at the Debt to FCF ratio, with a value of 1.47, GWW is in the better half of the industry, outperforming 77.55% of the companies in the same industry.
A Debt/Equity ratio of 0.65 indicates that GWW is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.65, GWW is in line with its industry, outperforming 51.02% of the companies in the same 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 | 0.65 | ||
| 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.
Looking at the Current ratio, with a value of 2.74, GWW is in the better half of the industry, outperforming 71.43% of the companies in the same industry.
A Quick Ratio of 1.60 indicates that GWW should not have too much problems paying its short term obligations.
GWW has a Quick ratio of 1.60. This is in the better half of the industry: GWW outperforms 71.43% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.74 | ||
| Quick Ratio | 1.6 |
3. Growth
3.1 Past
GWW shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 6.93%.
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.
The Revenue has been growing slightly by 3.71% 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)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
Based on estimates for the next years, GWW will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.65% on average per year.
The Revenue is expected to grow by 7.02% on average over the next years.
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
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 stable.
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.
GWW's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of GWW to the average of the S&P500 Index (27.45), we can say GWW is valued inline with the index average.
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.
When comparing the Price/Forward Earnings ratio of GWW to the average of the S&P500 Index (21.90), we can say GWW is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.8 | ||
| Fwd PE | 23.29 |
4.2 Price Multiples
61.22% of the companies in the same industry are cheaper than GWW, based on the Enterprise Value to EBITDA ratio.
GWW's Price/Free Cash Flow is on the same level as the industry average.
| 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 an expensive valuation of the company.
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
GWW has a yearly dividend return of 0.86%, which is pretty low.
Compared to an average industry Dividend Yield of 2.99, GWW has a dividend in line with its industry peers.
With a Dividend Yield of 0.86, GWW pays less dividend than the S&P500 average, which is at 2.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.86% |
5.2 History
The dividend of GWW is nicely growing with an annual growth rate of 7.57%!
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
GWW pays out 22.57% of its income as dividend. This is a sustainable payout ratio.
GWW's earnings are growing more than its dividend. This makes the dividend growth 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 | 0.86% |
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%