Grainger (GWW) Q1 Earnings & Sales Top Estimates, Up Y/Y

W.W. Grainger, Inc. GWW reported first-quarter 2021 adjusted earnings per share (EPS) of $4.48, beating the Zacks Consensus Estimate of $4.31. The bottom line increased 6% year over year primarily on lower operating earnings.

Including one-time items, earnings came in at $4.48 in the reported quarter. The figure jumped 40% from the year-ago quarter.

Grainger’s quarterly revenues went up 3% year over year to $3,084 million. The top line also surpassed the Zacks Consensus Estimate of $3,054 billion.

Daily sales for the quarter increased 5.9% compared with the prior-year quarter. This increase in sales was driven by strong performance in both the High-Touch Solutions North America (N.A.) and Endless Assortment segments.

Operational Update

Adjusted cost of sales increased 6% year over year to $1,991 million. Gross profit was down 2% year over year to $1,093 million. Gross margin contracted to 35.5% in the quarter from the prior-year quarter’s 37.4% due to the pandemic-induced headwinds.

Grainger’s adjusted operating income in the first quarter was up 4% year on year to $358 million. Adjusted operating margin came in at 11.6% compared with the prior-year quarter’s 11.4%.

Financial Position

The company had cash and cash equivalents of $562 million as of Mar 31, 2021, down from $585 million as of Dec 31, 2020. Cash provided by operating activities increased to $294 million in first-quarter 2021 from $244 million in the prior-year quarter.

Long-term debt was $2,373 million as of Mar 31, 2021, compared with $2,389 million as of Dec 31, 2020. During the first quarter, the company returned $256 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.

Price Performance

Over the past year, Grainger’s shares have gained 63.5% compared with the industry’s rally of 78.2%.

Zacks Rank and Stocks to Consider

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

Better-ranked stocks in the Industrial Products sector include Dover Corporation (NYSE:DOV) DOV, Caterpillar Inc (NYSE:CAT). CAT and Pentair (NYSE:PNR) plc PNR, each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dover has a projected earnings growth rate of 21.8% for 2021. Over the past year, the company’s shares have gained 54.3%.

Caterpillar has an estimated earnings growth rate of 25.7% for the ongoing year. The company’s shares have rallied 99.7% in the past year.

Pentair has an expected earnings growth rate of 11.6% for 2021. The stock has surged 86% in a year’s time.

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