Grainger (GWW) Earnings & Sales Miss Estimates in Q2, Up Y/Y

W.W. Grainger, Inc. GWW reported second-quarter 2021 adjusted earnings per share (EPS) of $4.27, missing the Zacks Consensus Estimate of $4.61. The bottom line, however, increased 14%, year over year, primarily on higher operating earnings and lower average shares outstanding in the current period.

Including one-time items, earnings came in at $4.27 in the reported quarter. The figure surged 103% from the year-ago quarter.

Grainger’s quarterly revenues went up 13% year over year to $3,207 million. The top line also lagged the Zacks Consensus Estimate of $3,234 million.

Daily sales for the quarter increased 13.1% compared with the prior-year period. This increase in sales was driven by a strong performance in both the High-Touch Solutions North America (N.A.) and Endless Assortment segments.

W.W. Grainger, Inc. Price, Consensus and EPS Surprise

W.W. Grainger, Inc. Price, Consensus and EPS Surprise

W.W. Grainger, Inc. price-consensus-eps-surprise-chart | W.W. Grainger, Inc. Quote

Operational Update

Cost of sales increased 14% year over year to $2,083 million. Gross profit climbed 11% year over year to $1,124 million. Gross margin came in at 35% in the quarter, marginally down from the prior-year period’s 35.8%.

Grainger’s adjusted operating income in the second quarter was up 6% year on year to $334 million. Adjusted operating margin came in at 10.4% compared with the prior-year quarter’s 11.1%.

Financial Position

The company had cash and cash equivalents of $547 million as of Jun 30, 2021, down from $585 million as of Dec 31, 2020. Cash provided by operating activities increased to $269 million in second-quarter 2021 from the prior-year quarter’s $232 million.

Long-term debt was $2,375 million as of Jun 30, 2021, compared with $2,389 million as of Dec 31, 2020. During the second quarter, the company returned $203 million to shareholders through dividends and share buybacks.

2021 Outlook

Grainger projects net sales for the current year to lie between $12.7 billion and $13 billion. The company anticipates earnings per share in the band of $19.00-$20.50 for 2021.

Price Performance

Over the past year, Grainger’s shares have gained 37.2% compared with the industry’s growth of 18.2%.

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Zacks Rank and Stocks to Consider

Grainger currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Industrial Products sector include Greif, Inc. GEF, Lindsay Corp. LNN and Pentair plc PNR. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained 29.9%, in the past year.

Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. In a year's time, the company’s shares have rallied 22.3%.

Pentair has a projected earnings growth rate of 26% for 2021. The stock has appreciated 36.7%, over the past year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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