WW GRAINGER INC (GWW) Stock Fundamental Analysis
NYSE:GWW - New York Stock Exchange, Inc. - US3848021040 - Common Stock - Currency: USD
Overall GWW gets a fundamental rating of 6 out of 10. We evaluated GWW against 48 industry peers in the Trading Companies & Distributors industry. GWW scores excellent on profitability, but there are some minor concerns on its financial health. 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.
GWW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
GWW's Return On Assets of 21.62% is amongst the best of the industry. GWW outperforms 97.87% of its industry peers.
GWW has a Return On Equity of 51.55%. This is amongst the best in the industry. GWW outperforms 100.00% of its industry peers.
The Return On Invested Capital of GWW (30.94%) is better than 100.00% of its industry peers.
GWW had an Average Return On Invested Capital over the past 3 years of 30.82%. This is significantly above the industry average of 9.53%.
The 3 year average ROIC (30.82%) for GWW is below the current ROIC(30.94%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.62% | ||
| ROE | 51.55% | ||
| ROIC | 30.94% |
ROA(3y)21.49%
ROA(5y)18.26%
ROE(3y)57.89%
ROE(5y)53.47%
ROIC(3y)30.82%
ROIC(5y)27.35%
1.3 Margins
With an excellent Profit Margin value of 11.12%, GWW belongs to the best of the industry, outperforming 80.85% of the companies in the same industry.
GWW's Profit Margin has improved in the last couple of years.
The Operating Margin of GWW (15.36%) is better than 76.60% of its industry peers.
In the last couple of years the Operating Margin of GWW has grown nicely.
GWW's Gross Margin of 39.36% is fine compared to the rest of the industry. GWW outperforms 68.09% of its industry peers.
GWW's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.36% | ||
| PM (TTM) | 11.12% | ||
| GM | 39.36% |
OM growth 3Y8.94%
OM growth 5Y4.91%
PM growth 3Y11.56%
PM growth 5Y8.51%
GM growth 3Y2.79%
GM growth 5Y0.56%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so 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
The Debt to FCF ratio of GWW is 1.77, which is an excellent value as it means it would take GWW, only 1.77 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 1.77, GWW is doing good in the industry, outperforming 76.60% of the companies in the same industry.
A Debt/Equity ratio of 0.62 indicates that GWW is somewhat dependend on debt financing.
GWW's Debt to Equity ratio of 0.62 is in line compared to the rest of the industry. GWW outperforms 51.06% 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 | 0.62 | ||
| Debt/FCF | 1.77 | ||
| Altman-Z | N/A |
ROIC/WACC2.89
WACC10.69%
2.3 Liquidity
GWW has a Current Ratio of 2.49. This indicates that GWW is financially healthy and has no problem in meeting its short term obligations.
GWW has a better Current ratio (2.49) than 70.21% of its industry peers.
GWW has a Quick Ratio of 1.49. 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 Quick ratio of 1.49. This is in the better half of the industry: GWW outperforms 68.09% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.49 | ||
| Quick Ratio | 1.49 |
3. Growth
3.1 Past
GWW shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 6.30%.
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 4.19% 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)6.3%
EPS 3Y25.23%
EPS 5Y17.64%
EPS Q2Q%16.57%
Revenue 1Y (TTM)4.19%
Revenue growth 3Y9.65%
Revenue growth 5Y8.37%
Sales Q2Q%5.9%
3.2 Future
GWW is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.36% yearly.
Based on estimates for the next years, GWW will show a small growth in Revenue. The Revenue will grow by 5.63% on average per year.
EPS Next Y4.66%
EPS Next 2Y7.74%
EPS Next 3Y8.55%
EPS Next 5Y6.36%
Revenue Next Year4.44%
Revenue Next 2Y5.44%
Revenue Next 3Y5.95%
Revenue Next 5Y5.63%
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 decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
GWW is valuated quite expensively with a Price/Earnings ratio of 25.38.
GWW's Price/Earnings ratio is a bit more expensive when compared to the industry. GWW is more expensive than 61.70% of the companies in the same industry.
When comparing the Price/Earnings ratio of GWW to the average of the S&P500 Index (29.75), we can say GWW is valued inline with the index average.
GWW is valuated rather expensively with a Price/Forward Earnings ratio of 24.25.
63.83% of the companies in the same industry are cheaper than GWW, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 22.44. GWW is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.38 | ||
| Fwd PE | 24.25 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, GWW is valued a bit more expensive than the industry average as 70.21% of the companies are valued more cheaply.
GWW's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.67 | ||
| EV/EBITDA | 17.54 |
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)5.44
PEG (5Y)1.44
EPS Next 2Y7.74%
EPS Next 3Y8.55%
5. Dividend
5.1 Amount
GWW has a yearly dividend return of 0.81%, which is pretty low.
GWW's Dividend Yield is comparable with the industry average which is at 1.98.
With a Dividend Yield of 0.81, GWW pays less dividend than the S&P500 average, which is at 2.30.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.81% |
5.2 History
The dividend of GWW is nicely growing with an annual growth rate of 7.49%!
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)7.49%
Div Incr Years34
Div Non Decr Years34
5.3 Sustainability
22.05% of the earnings are spent on dividend by GWW. This is a low number and sustainable payout ratio.
GWW's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP22.05%
EPS Next 2Y7.74%
EPS Next 3Y8.55%
988.78
-10.72 (-1.07%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners73.25%
Inst Owner Change-0.17%
Ins Owners6.02%
Ins Owner Change0.32%
Market Cap48.15B
Analysts66.09
Price Target1116.73 (12.94%)
Short Float %2.55%
Short Ratio4.04
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.81% |
Yearly Dividend8.59
Dividend Growth(5Y)7.49%
DP22.05%
Div Incr Years34
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-1.67%
Min EPS beat(2)-1.99%
Max EPS beat(2)-1.35%
EPS beat(4)1
Avg EPS beat(4)-0.87%
Min EPS beat(4)-1.99%
Max EPS beat(4)0.86%
EPS beat(8)5
Avg EPS beat(8)1.99%
EPS beat(12)9
Avg EPS beat(12)4.27%
EPS beat(16)12
Avg EPS beat(16)3.39%
Revenue beat(2)0
Avg Revenue beat(2)-1.26%
Min Revenue beat(2)-1.28%
Max Revenue beat(2)-1.24%
Revenue beat(4)0
Avg Revenue beat(4)-1.46%
Min Revenue beat(4)-1.8%
Max Revenue beat(4)-1.24%
Revenue beat(8)0
Avg Revenue beat(8)-1.4%
Revenue beat(12)3
Avg Revenue beat(12)-0.4%
Revenue beat(16)6
Avg Revenue beat(16)-0.24%
PT rev (1m)-1.04%
PT rev (3m)-0.77%
EPS NQ rev (1m)-8.09%
EPS NQ rev (3m)-8.5%
EPS NY rev (1m)-4.06%
EPS NY rev (3m)-4.27%
Revenue NQ rev (1m)-2.4%
Revenue NQ rev (3m)-2.51%
Revenue NY rev (1m)-1.41%
Revenue NY rev (3m)-1.62%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.38 | ||
| Fwd PE | 24.25 | ||
| P/S | 2.8 | ||
| P/FCF | 30.67 | ||
| P/OCF | 22.81 | ||
| P/B | 13 | ||
| P/tB | 15.51 | ||
| EV/EBITDA | 17.54 |
EPS(TTM)38.96
EY3.94%
EPS(NY)40.78
Fwd EY4.12%
FCF(TTM)32.24
FCFY3.26%
OCF(TTM)43.35
OCFY4.38%
SpS352.53
BVpS76.04
TBVpS63.76
PEG (NY)5.44
PEG (5Y)1.44
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.62% | ||
| ROE | 51.55% | ||
| ROCE | 40.42% | ||
| ROIC | 30.94% | ||
| ROICexc | 36.78% | ||
| ROICexgc | 41.28% | ||
| OM | 15.36% | ||
| PM (TTM) | 11.12% | ||
| GM | 39.36% | ||
| FCFM | 9.14% |
ROA(3y)21.49%
ROA(5y)18.26%
ROE(3y)57.89%
ROE(5y)53.47%
ROIC(3y)30.82%
ROIC(5y)27.35%
ROICexc(3y)34.61%
ROICexc(5y)30.43%
ROICexgc(3y)38.88%
ROICexgc(5y)34.53%
ROCE(3y)40.26%
ROCE(5y)35.73%
ROICexcg growth 3Y13.56%
ROICexcg growth 5Y5.03%
ROICexc growth 3Y14.42%
ROICexc growth 5Y6.84%
OM growth 3Y8.94%
OM growth 5Y4.91%
PM growth 3Y11.56%
PM growth 5Y8.51%
GM growth 3Y2.79%
GM growth 5Y0.56%
F-Score5
Asset Turnover1.94
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 1.77 | ||
| Debt/EBITDA | 0.79 | ||
| Cap/Depr | 228.27% | ||
| Cap/Sales | 3.15% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 73.45% | ||
| Profit Quality | 82.24% | ||
| Current Ratio | 2.49 | ||
| Quick Ratio | 1.49 | ||
| Altman-Z | N/A |
F-Score5
WACC10.69%
ROIC/WACC2.89
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)6.3%
EPS 3Y25.23%
EPS 5Y17.64%
EPS Q2Q%16.57%
EPS Next Y4.66%
EPS Next 2Y7.74%
EPS Next 3Y8.55%
EPS Next 5Y6.36%
Revenue 1Y (TTM)4.19%
Revenue growth 3Y9.65%
Revenue growth 5Y8.37%
Sales Q2Q%5.9%
Revenue Next Year4.44%
Revenue Next 2Y5.44%
Revenue Next 3Y5.95%
Revenue Next 5Y5.63%
EBIT growth 1Y1.78%
EBIT growth 3Y19.46%
EBIT growth 5Y13.7%
EBIT Next Year13.78%
EBIT Next 3Y10.49%
EBIT Next 5Y6.19%
FCF growth 1Y-1.01%
FCF growth 3Y32.04%
FCF growth 5Y13.84%
OCF growth 1Y3.94%
OCF growth 3Y31.09%
OCF growth 5Y15.17%