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Grainger (GWW) to Report Q4 Earnings: What's in the Offing?

Zacks Equity Research

W.W. Grainger, Inc. GWW is expected to report fourth-quarter 2019 results on Jan 30, before the opening bell.

Which Way Are Estimates Heading?

The Zacks Consensus Estimate for the December-end quarter revenues is pegged at $2,848 million, indicating an improvement of 3.1% from the year-ago quarter. The same for earnings is pinned at $4.03, suggesting year-over-year growth of 1.76%.

A Sneak Peak at Q3 Results

In the last reported quarter, Grainger’s earnings and revenues missed the Zacks Consensus Estimate but improved year over year. The company delivered a positive earnings surprise in two of the trailing four quarters, the average beat being 1.94%.

Shares of the company have gained 14% in a year, outperforming the industry’s growth of 1.1%.


Will the upcoming earnings release provide a boost to Grainger’s stock? Let’s take a look.

Factors at Play

Grainger continues to strengthen its relationship with customers in the United States. The company is focused on improving end-to-end consumer experience by making investments in e-commerce and digital capabilities, and implementing supply-chain improvement initiatives. Benefits from these factors will likely be reflected in the upcoming quarterly results. Further, operating performance and favorable tax rates are likely to have driven bottom-line growth in the fourth quarter.

The Zacks Consensus Estimate for Grainger’s quarterly sales in the United States is $2,172 million, suggesting 2.6% year-over-year growth. The Zacks Consensus Estimate for the segment’s adjusted operating income is pegged at $321 million, calling for a 3.8% year-over-year improvement. Also, solid business investments in the United States are anticipated to have fueled growth.

The Zacks Consensus Estimate for the Canada segment's fourth-quarter net sales is currently pegged at $129 million, suggesting a year-over-year drop of 11%. The company has been focused on reducing its cost structure in the Canada operations and managing inventory to drive growth, while also focusing on making incremental investments in marketing and merchandising. This trend is likely to have continued during the October-December period as well.

However, the company’s fourth-quarter results will likely reflect the unfavorable impact of input-cost inflation and foreign-exchange headwinds. Rising freight costs are another challenge for the company. Additionally, higher operating expenses, due to investments in digital-marketing capabilities, are another concern. These are likely to have eroded its margin performance during the period under consideration.

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

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

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Grainger this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Grainger is 0.00%. This is because currently the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at $4.03.

Zacks Rank: Grainger currently carries a Zacks Rank of 2.

Stocks Poised to Beat Earnings Estimates

Here are a few Industrial Products stocks which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

Lindsay Corporation LNN has an Earnings ESP of +8.07% and sports a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dover Corporation DOV currently carries a Zacks Rank #3 and has an Earnings ESP of +1.72%.

Lincoln Electric Holdings, Inc. LECO, another Zacks #3 Ranked stock, has an Earnings ESP of +1.01%.

Zacks Top 10 Stocks for 2020

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Lincoln Electric Holdings, Inc. (LECO) : Free Stock Analysis Report
 
Lindsay Corporation (LNN) : Free Stock Analysis Report
 
Dover Corporation (DOV) : Free Stock Analysis Report
 
W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report
 
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Zacks Investment Research