10Y annualized return is
excellent
at 15.1% per year
GWW has met or exceeded earnings expectations in
the majority of
recent quarters (7/10)
Reasonable Price-to-Earnings Ratio
Strong Price-to-Sales Ratio
High Return on Equity
Solid Gross Profit Margin
Strong Current Ratio
Low Debt Levels
🏆 Strong Customer Focus
📈 Robust Growth in Segments
💡 Data and Technology Investment
🚀 Growth Engines in Place
🔄 Focus on Innovation
High Price-to-Cash Flow Ratio
Elevated Price-to-Book Ratio
Moderate Net Profit Margin
Operating Profit Margin Concerns
Low Cash Ratio
Interest Coverage Ratio
⚠️ Market Dependency
📉 Cautious Market Outlook
Grainger exhibits strong business quality through its customer-centric focus and significant technological investments. However, its dependency on market conditions poses risks. Future prospects are bolstered by innovation and growth strategies, though a cautious outlook suggests challenges ahead.
Analysis Date: January 31, 2025
Last Updated: March 12, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
W.W. Grainger, Inc. is a company that helps businesses and organizations get the supplies they need to keep things running smoothly. They sell a wide range of products like safety gear, tools, cleaning supplies, and equipment for handling materials. Grainger also provides services to help companies manage their inventory and find technical support. Founded in 1927, they operate in several countries, including the U.S., Canada, and Japan, making it easy for customers to order what they need online or through sales representatives.
Streams of revenue
Geographic Distribution
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$1512.27
Current Market Price: $928.03
IV/P Ratio: 1.63x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
39.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for GWW
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (23.99)
P/B ratio ≤ 1.5 (5.19)
Current ratio ≥ 2.0 (2.49x)
Long-term debt < Net current assets (0.76x)
Margin of safety (39.0%)
GWW does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
40.60%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
39.36%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
11.12%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
A return on equity of 40.60% indicates strong profitability relative to shareholders' equity, showcasing effective use of capital.
The gross profit margin of 39.36% reflects a strong capability to maintain profitability at the core operational level.
The net profit margin of 11.12% suggests that while the company is profitable, there may be room for improvement in controlling expenses relative to revenue.
An operating profit margin of 15.36% indicates potential inefficiencies in operating expenses that could be addressed to enhance profitability.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.30x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
2.49x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
A current ratio of 2.49 indicates excellent short-term liquidity, suggesting the company can cover its short-term liabilities comfortably.
With a debt-to-equity ratio of 0.30, the company maintains a conservative leverage profile, reducing financial risk.
The cash ratio of 0.45 indicates that while liquidity is generally strong, there is limited cash on hand relative to current liabilities, which could be a concern in a liquidity crunch.
While the interest coverage ratio of 34.25 is strong, it’s essential to monitor the sustainability of this coverage in the context of rising interest rates.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Grainger emphasizes exceptional customer service and experience as a core element of its business strategy. The company aims to meet two fundamental customer needs: seamless purchasing and delivering tangible value, which enhances customer loyalty.
The company reported solid growth across its High-Touch Solutions and Endless Assortment segments, with the Endless Assortment segment achieving daily constant currency sales growth of 11.6%. This indicates a strong market position and effective strategies to capture demand.
Grainger has made significant investments in technology and data analytics, building proprietary systems that enhance operational efficiency and customer insights. This positions the company to leverage digital capabilities effectively.
The company is heavily dependent on the overall MRO market conditions, which are currently projected to remain sluggish. This dependency could limit growth if external market factors do not improve.
Grainger's strategic growth engines, including the expansion of its supply chain and the introduction of new technologies such as AI and machine learning, position the company for future growth. The focus on continuous improvement in operational processes and customer solutions supports sustainable growth.
The integration of AI and advanced technologies into Grainger's operations demonstrates the company's commitment to innovation. Initiatives like using generative AI in customer service and machine learning for inventory management showcase the potential for efficiency gains and enhanced customer experiences.
Grainger's guidance for 2025 suggests a cautious approach, expecting sales growth at the low end of previous targets. This indicates potential challenges in achieving higher growth amidst a sluggish demand environment.