WW Grainger (GWW) AI Stock Analysis

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WW Grainger

(NYSE:GWW)

Select Model

Outperform 70 (OpenAI - 4o)

Rating:70Outperform

Price Target:

$1,093.00

▲(15.35% Upside)

WW Grainger's overall stock score reflects strong financial performance and solid earnings growth, particularly in the Endless Assortment segment. However, technical indicators suggest caution, and valuation metrics indicate potential overvaluation. The earnings call provided a stable outlook despite margin pressures, contributing to a balanced score.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective sales strategies, enhancing long-term business sustainability.

Endless Assortment Segment

The strong performance in the Endless Assortment segment showcases Grainger's ability to capture diverse customer needs, supporting future growth.

Cash Generation

Robust cash generation supports financial flexibility and shareholder value, enabling reinvestment in growth opportunities.

Negative Factors

Gross Margin Pressure

Margin pressures from tariffs and segment mix can impact profitability, challenging long-term cost management strategies.

Price/Cost Timing Headwinds

Ongoing price/cost timing issues may affect cost predictability and margins, complicating financial planning and stability.

High-Touch Solutions Margin Decline

Declining margins in key segments could signal operational inefficiencies, potentially affecting competitive positioning.

WW Grainger (GWW) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$45.32B

Dividend Yield0.91%

Average Volume (3M)292.33K

Price to Earnings (P/E)23.9

Beta (1Y)0.90

Revenue Growth4.35%

EPS Growth7.84%

CountryUS

Employees23,500

SectorIndustrials

Sector Strength72

IndustryIndustrial - Distribution

Share Statistics

EPS (TTM)9.97

Shares Outstanding47,832,245

10 Day Avg. Volume256,384

30 Day Avg. Volume292,334

Financial Highlights & Ratios

PEG Ratio4.14

Price to Book (P/B)15.35

Price to Sales (P/S)3.00

P/FCF Ratio32.83

Enterprise Value/Market Cap1.16

Enterprise Value/Revenue3.01

Enterprise Value/Gross Profit7.66

Enterprise Value/Ebitda17.92

Forecast

1Y Price Target

$1,052.50

Price Target Upside11.07% Upside

Rating ConsensusHold

Number of Analyst Covering12

WW Grainger Business Overview & Revenue Model

Company DescriptionW.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.

How the Company Makes MoneyGrainger generates revenue primarily through the sale of MRO products to businesses and institutions. Its revenue model relies on a combination of direct sales, online sales through its e-commerce platform, and procurement services. Key revenue streams include product sales, subscription services for inventory management, and value-added services such as technical support and training. Additionally, Grainger has formed partnerships with various manufacturers and suppliers to enhance its product offerings and maintain competitive pricing. The company's strong focus on customer service and logistics efficiency also contributes significantly to its earnings, as it helps retain existing customers and attract new ones.

WW Grainger Key Performance Indicators (KPIs)

Any

Operating Earnings by Segment

Operating Earnings by Segment
Highlights the profitability of different business segments, providing insight into which areas are driving earnings and where there might be challenges or opportunities for growth.

Chart InsightsWW Grainger's Endless Assortment segment is experiencing robust growth, driven by strong performance in Zoro U.S. and MonotaRO, as highlighted in the latest earnings call. This contrasts with the High Touch Solutions segment, which faces margin pressures due to LIFO inventory valuation and tariff-related costs. Despite these challenges, the company is optimistic about gross margin recovery through strategic pricing. Investors should note the updated earnings outlook reflecting these dynamics, with a focus on capital expenditures to enhance distribution capabilities.

Data provided by:

Main Street Data

WW Grainger Earnings Call Summary

Earnings Call Date:Aug 01, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Oct 31, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted solid sales growth, particularly in the Endless Assortment segment, and strong operating cash flow. However, it also noted challenges with gross margin pressure due to tariff-related impacts and LIFO accounting, leading to a lower 2025 outlook. The balance between positive sales momentum and margin-related challenges suggests a cautious but stable outlook.

Q2-2025 Updates

Positive Updates

Total Company Sales Growth

Total company reported sales for the quarter were nearly $4.6 billion, up 5.6% or 5.1% on a daily constant currency basis.

Endless Assortment Segment Growth

Sales increased 19.7% or 16.3% on a daily constant currency basis. Zoro U.S. was up 20%, while MonotaRO achieved 16.4% growth in local days, local constant currency.

Operating Cash Flow and Shareholder Returns

Operating cash flow came in at $377 million, allowing the company to return $336 million to shareholders through dividends and share repurchases.

Improvement in Zoro Business

Zoro continues its strong momentum driven by growth from its core B2B customers, along with improving customer retention rates.

Negative Updates

Gross Margin Pressure

Gross margin softness from segment mix and tariff-related impacts led to total company operating margins of 14.9% for the quarter, down 50 basis points compared to 2024.

Price/Cost Timing Headwinds

Anticipated continued LIFO headwinds along with further price/cost timing pressures, impacting performance in the back half of the year.

Updated 2025 Outlook

Lowered gross margin guide with the total company now expected to be between 38.6% and 38.9%, down 80 to 50 basis points year-over-year. Earnings per share expected between $38.50 and $40.25, up roughly 1% year-over-year at the midpoint.

High-Touch Solutions Segment Margin Decline

Operating margin for the High-Touch Solutions segment finished at 16.6%, down 90 basis points versus the prior year quarter.

Company Guidance

During the W.W. Grainger Second Quarter 2025 Earnings Conference Call, the company reported nearly $4.6 billion in total sales, reflecting a 5.6% increase or 5.1% on a daily constant currency basis. Operating margins were at 14.9%, and diluted EPS rose by $0.21 to $9.97. Operating cash flow was $377 million, enabling $336 million to be returned to shareholders through dividends and share repurchases. The High-Touch Solutions segment saw a 2.5% sales increase, while the Endless Assortment segment experienced a 19.7% sales growth. The company anticipates continued pressure from LIFO inventory valuation and price/cost timing in the latter half of the year, leading to an updated EPS outlook of $38.50 to $40.25, up 1% year-over-year at the midpoint. The company also expects capital expenditures to increase by $100 million due to DC network investments.

WW Grainger Financial Statement Overview

Summary

W.W. Grainger demonstrates robust financial performance with strong revenue and profit growth, efficient operations, and effective capital management. The company has maintained healthy leverage and improved margins, although increased capital expenditures and declining cash reserves could present future challenges. Overall, the company is in a strong financial position.

Income Statement

Very Positive

The income statement shows strong growth with a consistent revenue increase from $11.8B in 2020 to $17.5B in TTM (Trailing-Twelve-Months) 2025. Gross profit margin improved to 39.2% in TTM 2025 from 35.9% in 2020, indicating effective cost management. Net profit margin also improved to 11.0% in TTM 2025 from 5.9% in 2020. The EBIT margin rose from 8.6% in 2020 to 15.3% in TTM 2025, highlighting operational efficiency. However, the EBITDA margin saw a slight decline recently, indicating potential non-operational cost pressures.

Balance Sheet

Positive

The balance sheet is solid, with a debt-to-equity ratio of 0.31 in TTM 2025, which is healthy and suggests prudent financial leverage. Return on equity has been strong, climbing to 21.5% in TTM 2025 from 14.6% in 2020, reflecting efficient use of equity. The equity ratio improved to 100% in TTM 2025, indicating a well-capitalized position. However, the decrease in cash reserves over the years could be a point of concern for liquidity.

Cash Flow

Very Positive

Cash flow analysis shows robust growth in free cash flow, rising from $926M in 2020 to $1.42B in TTM 2025, a sign of strong cash generation. Operating cash flow to net income ratio remains favorable, indicating good cash conversion efficiency. However, capital expenditures have increased significantly, which could pressure future cash flows if not managed carefully.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	17.48B	17.17B	16.48B	15.23B	13.02B	11.80B
Gross Profit	6.86B	6.69B	6.50B	5.85B	4.72B	4.24B
EBITDA	2.93B	2.90B	2.81B	2.40B	1.74B	1.22B
Net Income	1.92B	1.91B	1.83B	1.55B	1.04B	695.00M
Balance Sheet
Total Assets	8.94B	8.83B	8.15B	7.59B	6.59B	6.29B
Cash, Cash Equivalents and Short-Term Investments	597.00M	1.04B	660.00M	325.00M	241.00M	585.00M
Total Debt	2.73B	3.18B	2.75B	2.71B	2.76B	2.62B
Total Liabilities	4.85B	5.13B	4.71B	4.85B	4.43B	4.20B
Stockholders Equity	3.67B	3.36B	3.12B	2.44B	1.87B	1.83B
Cash Flow
Free Cash Flow	1.42B	1.57B	1.59B	1.08B	682.00M	926.00M
Operating Cash Flow	2.06B	2.11B	2.03B	1.33B	937.00M	1.12B
Investing Cash Flow	-626.00M	-520.00M	-422.00M	-263.00M	-226.00M	-179.00M
Financing Cash Flow	-1.62B	-1.18B	-1.28B	-972.00M	-1.04B	-726.00M

WW Grainger Technical Analysis

Technical Analysis Sentiment

Negative

Last Price947.56

Price Trends

50DMA

979.35

Negative

100DMA

1016.43

Negative

200DMA

1020.78

Negative

Market Momentum

MACD

-10.48

Negative

RSI

38.89

Neutral

STOCH

67.26

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GWW, the sentiment is Negative. The current price of 947.56 is below the 20-day moving average (MA) of 968.63, below the 50-day MA of 979.35, and below the 200-day MA of 1020.78, indicating a bearish trend. The MACD of -10.48 indicates Negative momentum. The RSI at 38.89 is Neutral, neither overbought nor oversold. The STOCH value of 67.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GWW.

WW Grainger Risk Analysis

WW Grainger disclosed 24 risk factors in its most recent earnings report. WW Grainger reported the most risks in the "Ability to Sell" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

WW Grainger Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WCC	77 Outperform	$10.14B	16.31	13.78%	0.85%	1.30%	-1.09%
MSM	75 Outperform	$4.77B	24.17	14.34%	3.97%	-4.11%	-31.26%
FAST	73 Outperform	$52.54B	44.24	32.57%	1.86%	4.84%	2.98%
GWW	70 Outperform	$45.32B	23.91	55.30%	0.91%	4.35%	7.84%
WSO	69 Neutral	$14.97B	28.09	18.38%	3.11%	0.98%	0.80%
FERG	69 Neutral	£45.40B	24.84	32.29%	1.43%	3.80%	9.26%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

* Industrials Sector Average

Performance Comparison

GWW

WW Grainger

947.56

-141.76

-13.01%

FAST

Fastenal Company

45.78

8.23

21.92%

MSM

MSC Industrial

85.68

6.06

7.61%

WSO

Watsco

366.95

-118.73

-24.45%

WCC

Wesco International

208.29

34.51

19.86%

FERG

Ferguson PLC

231.47

33.57

16.96%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Sep 17, 2025