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Grainger (GWW) to Post Q3 Earnings: What's in the Offing?

W.W. Grainger, Inc. GWW is scheduled to report third-quarter 2020 results on Oct 22, before the opening bell.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter revenues is pegged at $2.97 billion, indicating growth of 0.7% from the year-ago quarter. The same for earnings per share stands at $4.12, suggesting a decline of 3.3% from the prior-year reported figure. The estimate for earnings has remained stable over the past 30 days.

Q2 Results

In the last reported quarter, Grainger’s revenues and earnings declined on a year-over-year basis. However, the company beat the Zacks Consensus Estimate on both counts. Notably, the company has missed the Zacks Consensus Estimate in three of the trailing four quarters, while surpassing in one quarter. It has a trailing four-quarter negative earnings surprise of 1.02%, on average.

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

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

Factors to Note

Grainger has been experiencing a surge in sales of personal protective equipment (PPE) and safety products courtesy of higher customer demand in response to the coronavirus pandemic. The incremental demand is primarily stemming from customers in the front-lines of the pandemic, including hospitals, healthcare providers, governments, first responders and critical manufactures. The company has been witnessing increased levels of safety and cleaning product sales to large healthcare, government and critical manufacturing customers, which might have aided the third-quarter performance.

Further, with customers forced to stay at home owing to restrictions imposed by governments globally to stem the coronavirus spread, e-commerce sales are likely to have contributed to the to-be-reported quarter’s performance. Meanwhile, the company caters to customers in the manufacturing and transportation industries, which have been impacted by the coronavirus outbreak. This may have weighed on Grainger’s third-quarter results. Further, the Canada business has a heavy exposure to natural resource customer base. Volatility in oil prices is likely to have impacted the segment’s third-quarter performance.

The COVID-19 pandemic las led to a shift in demand toward lower-margin products. In addition, higher operating costs in response to the COVID-19 pandemic and related activities are likely to have impacted operating margin in the quarter to be reported. Nevertheless, the company’s ongoing cost control measures undertaken in the wake of the ongoing uncertainty might have mitigated some of the impact.

Price Performance

Shares of the company have gained 21.1% in a year compared with the industry’s rally of 37.5%.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Grainger this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Grainger has an Earnings ESP of 0.00% .

Zacks Rank: Grainger currently carries a Zacks Rank of 3.

Stocks Poised to Beat Earnings Estimates

Here are some Industrial Product stocks, which you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

AGCO Corporation AGCO has an Earnings ESP of +6.07% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lindsay Corporation LNN, currently a Zacks #2 Ranked stock, has an Earnings ESP of +11.01%.

Pentair plc PNR has a Zacks Rank #2 and an Earnings ESP of +2.78%, at present.

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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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