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1. Company Snapshot

1.a. Company Description

W.W. Grainger, Inc.distributes maintenance, repair, and operating (MRO) products and services in the United States, Japan, Canada, the United Kingdom, and internationally.The company operates through two segments, High-Touch Solutions N.A. and Endless Assortment.


It offers safety and security supplies, material handling and storage equipment, pumps and plumbing equipment, cleaning and maintenance supplies, and metalworking and hand tools.It also offers inventory management and technical support services.The company serves businesses, corporations, government entities, and other institutions through sales and service representatives, and electronic and ecommerce channels.


W.W. Grainger, Inc.was founded in 1927 and is headquartered in Lake Forest, Illinois.

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1.b. Last Insights on GWW

W.W. Grainger's recent performance was negatively driven by its Q2 earnings miss, with EPS of $9.97 per share, falling short of the Zacks Consensus Estimate of $10 per share. The company's operating margin also declined by 20 basis points on a reported basis, and 50 basis points on an adjusted basis, year-over-year. Additionally, analysts have cut their forecasts following the earnings release, citing concerns over the company's ability to meet its full-year guidance.

1.c. Company Highlights

2. Grainger's Q3 2025 Earnings: Strong Execution Amidst External Uncertainty

Grainger delivered a solid performance in Q3 2025, with total company sales reaching $4.7 billion, up 5.4% on a daily constant currency basis. Gross margins were 38.6%, operating margins were 15.2%, and diluted EPS finished the quarter at $10.21, beating estimates of $9.98. Operating cash flow came in at $597 million, enabling the company to return $399 million to shareholders.

Publication Date: Nov -04

📋 Highlights
  • Total Sales Growth: $4.7 billion in Q3, up 5.4% on daily constant currency basis.
  • Earnings Per Share (EPS): Diluted EPS increased by $0.34 to $10.21 year-over-year.
  • Segment Performance: Endless Assortment grew 14.6% (daily constant currency), outpacing High-Touch Solutions at 3.4%.
  • Gross Margin Target: Anticipated stabilization at 39% for 2025, amid LIFO headwinds and inflationary pressures.
  • Strategic Shifts: Exit from U.K. market and $597M operating cash flow to return $399M to shareholders in Q3.

Segment Performance

The High-Touch Solutions segment saw sales grow 3.4% on both a reported and daily constant currency basis, driven by volume growth and price inflation. In contrast, the Endless Assortment segment performed strongly, with sales increasing 18.2% on a reported basis or 14.6% on a daily constant currency basis, driven by Zoro U.S. growth of 17.8% and MonotaRO achieving 12.6% growth in local days, local constant currency. As Donald Macpherson noted, the company is investing heavily in AI and data-driven solutions to improve customer experiences and create a market advantage.

Outlook and Guidance

Grainger expects gross margins to improve sequentially in Q4 2025, driven by normal seasonal recovery and improving price costs. The company anticipates gross margin to stabilize around 39% for the total company, subject to normal quarterly seasonality. For the remainder of 2025, Grainger expects daily organic constant currency sales growth of between 4.4% and 5.1% and a diluted adjusted EPS range of $39 to $39.75.

Valuation and Growth Prospects

With a P/E Ratio of 28.42 and an expected revenue growth rate of 6.1% next year, Grainger's valuation appears to be pricing in moderate growth expectations. The company's ROE of 33.72% and ROIC of 27.1% indicate strong profitability. The dividend yield of 0.89% and free cash flow yield of 2.67% suggest a relatively attractive return profile for investors.

LIFO Accounting and Margin Impact

The company expects LIFO headwinds to diminish as the year progresses, contributing to improved gross margins. Deidra Merriwether estimated that the LIFO charge will normalize, and the company will see gross margin improve due to price increases. The $52 million LIFO impact in Q3 is expected to be followed by additional LIFO impacts in the first half of 2026 due to ongoing cost cycles.

3. NewsRoom

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W.W. Grainger, Inc. $GWW Shares Acquired by Groupe la Francaise

Dec -04

Source: defenseworld.net

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2,800 Shares in W.W. Grainger, Inc. $GWW Acquired by BLI Banque de Luxembourg Investments

Dec -01

Source: defenseworld.net

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Clarkston Capital Partners LLC Acquires New Stake in W.W. Grainger, Inc. $GWW

Nov -28

Source: defenseworld.net

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Aviso Financial Inc. Purchases 64 Shares of W.W. Grainger, Inc. $GWW

Nov -26

Source: defenseworld.net

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American Century Companies Inc. Has $89.20 Million Stake in W.W. Grainger, Inc. $GWW

Nov -26

Source: defenseworld.net

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AXQ Capital LP Invests $1.18 Million in W.W. Grainger, Inc. $GWW

Nov -22

Source: defenseworld.net

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Avantax Advisory Services Inc. Has $4.10 Million Stock Holdings in W.W. Grainger, Inc. $GWW

Nov -20

Source: defenseworld.net

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AE Wealth Management LLC Boosts Holdings in W.W. Grainger, Inc. $GWW

Nov -14

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.80%)

6. Segments

High-Touch Solutions (N.A.)

Expected Growth: 7.2%

High-Touch Solutions is expected to grow slightly above the global average due to its focus on high-value customers and the potential for increased customer loyalty and retention, driving revenue growth.

Endless Assortment

Expected Growth: 8.0%

Endless Assortment is expected to be a key growth driver, benefiting from the trend towards e-commerce and the increasing demand for a wide range of products. Its growth rate is anticipated to be higher than the global average.

Other

Expected Growth: 6.0%

The 'Other' category is expected to grow at a rate slightly below the global average due to the diverse nature of the businesses it encompasses, some of which might be in early stages or less directly related to the company's core operations.

7. Detailed Products

Material Handling

Equipment and supplies for moving, storing, and managing materials, including pallet jacks, forklifts, and shelving units.

Facility Maintenance

Products for maintaining and repairing facilities, including lighting, plumbing, and HVAC supplies.

Safety and Security

Personal protective equipment, safety gear, and security products, including hard hats, gloves, and access control systems.

Metalworking

Tools and supplies for metal fabrication, including cutting tools, abrasives, and welding equipment.

Electrical and Electronics

Electrical and electronic components, including circuit breakers, fuses, and connectors.

Janitorial and Sanitation

Cleaning supplies, paper products, and waste management solutions for maintaining a clean and healthy environment.

Lab and Scientific

Laboratory equipment, supplies, and chemicals for scientific research, testing, and analysis.

Pumps and Plumbing

Pumps, valves, and plumbing supplies for industrial, commercial, and residential applications.

Power Transmission

Belts, chains, gears, and bearings for transmitting power and motion in industrial machinery.

8. W.W. Grainger, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

W.W. Grainger, Inc. faces moderate threat from substitutes due to the availability of alternative products and services from competitors. However, the company's strong brand reputation and customer loyalty mitigate this threat to some extent.

Bargaining Power Of Customers

W.W. Grainger, Inc. has a large and diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products and services are often critical to customers' operations, making it difficult for them to switch to alternative suppliers.

Bargaining Power Of Suppliers

W.W. Grainger, Inc. has a large and diverse supplier base, which reduces the bargaining power of individual suppliers. However, the company's reliance on a few key suppliers for certain products increases its vulnerability to supplier power.

Threat Of New Entrants

W.W. Grainger, Inc. operates in a highly competitive industry, but the barriers to entry are relatively high due to the need for significant investments in inventory, logistics, and technology. This makes it difficult for new entrants to gain a foothold in the market.

Intensity Of Rivalry

W.W. Grainger, Inc. operates in a highly competitive industry with many established players. The company faces intense competition from rivals such as Fastenal, MSC Industrial Direct, and Applied Industrial Technologies, which puts pressure on prices, margins, and market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.79%
Debt Cost 4.44%
Equity Weight 59.21%
Equity Cost 9.88%
WACC 7.66%
Leverage 68.90%

11. Quality Control: W.W. Grainger, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
TransDigm Group

A-Score: 6.4/10

Value: 3.0

Growth: 7.9

Quality: 6.7

Yield: 9.0

Momentum: 4.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
MSC Industrial Direct Co

A-Score: 6.1/10

Value: 4.2

Growth: 3.7

Quality: 6.0

Yield: 8.0

Momentum: 6.5

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Fastenal

A-Score: 6.1/10

Value: 0.9

Growth: 5.8

Quality: 7.8

Yield: 5.0

Momentum: 8.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
PACCAR

A-Score: 6.0/10

Value: 3.7

Growth: 6.7

Quality: 6.1

Yield: 8.0

Momentum: 3.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Paychex

A-Score: 5.8/10

Value: 1.8

Growth: 5.8

Quality: 9.0

Yield: 6.0

Momentum: 3.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Grainger

A-Score: 5.1/10

Value: 2.2

Growth: 7.8

Quality: 6.4

Yield: 2.0

Momentum: 3.0

Volatility: 9.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

975.54$

Current Price

975.54$

Potential

-0.00%

Expected Cash-Flows