On Mar 25, Zacks Investment Research downgraded
W.W. Grainger Inc.
) to a Zacks Rank #4 (Sell).
Why the Downgrade?
This leading broad line supplier of maintenance, repair and
operating (MRO) products reported earnings per share of $2.59, up
7% year over year, on Jan 24, but short of the Zacks Consensus
Estimate of $2.63 per share.
Citing a weaker Canadian dollar and the divestiture of a
number of direct marketing Specialty Brands, Grainger narrowed
its earnings-per-share guidance to the range of $12.10-$12.85 for
fiscal 2014, from the prior guidance of $12.25-$13.00 per share.
Grainger also lowered its sales growth guidance to a new range of
5% to 9%, against the prior guidance of 6% to 10%.
The trimmed guidance led to sharp negative estimate revisions for
fiscal 2014 for Grainger. Of the 14 estimates available, 13 have
been revised downward over the past 60 days. This led to a 3%
drop in the Zacks Consensus Estimate for fiscal 2014, which now
stands at $12.60 per share.
International operations are dragging down the company's
performance. Management is currently evaluating the operating
performance and strategic direction of some of its international
businesses that are not meeting expectations.
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On Mar 13, Grainger reported a 3% increase in February sales,
flat with the sales growth in January. The benefit of 2
percentage points from acquisitions (net of dispositions) was
offset by the unfavorable foreign exchange of 2 percentage
points. Excluding acquisitions and foreign exchange, organic
sales increased 3% driven by 4 percentage points from volume, 1
percentage point from increased sales of seasonal products,
partially offset by a 2 percentage point decline from business
disruptions due to the extreme cold weather that at times closed
customer and Grainger facilities across the United States during
Other Stocks to Consider
Stocks that are worth considering within this sector include
Altra Industrial Motion Corp.
). While Kadant holds a Zacks Rank #1 (Strong Buy), Altra
Industrial Motion and ScanSource hold a Zacks Rank #2 (Buy).