QUOTE AND NEWS
Market Intelligence Center  Aug 28  Comment 
Grainger (W W) Inc. (GWW) presents a trading opportunity that offers a 2.92% return in just 142 days. A covered call on WW Grainger at the $240.00 level expiring on Jan. '15 offers an assigned return rate of 2.92% or 7.50% annualized. This trade...
Market Intelligence Center  Aug 19  Comment 
After closing Monday at $242.83, Grainger (W W) Inc. (GWW) presents an attractive opportunity to get a 2.46% return in just 60 days, which is an annualized return of 14.99% (for comparison purposes only). To enter this trade, sell one Oct. '14...
StreetInsider.com  Aug 13  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/W.W.+Grainger%2C+Inc.+%28GWW%29+July+Sales+Increased+6%25/9747953.html for the full story.
newratings.com  Aug 13  Comment 
Market Intelligence Center  Aug 12  Comment 
After closing Monday at $237.61, Grainger (W W) Inc. (GWW) presents an attractive opportunity to get a 2.26% return in just 67 days, which is an annualized return of 12.33% (for comparison purposes only). To enter this trade, sell one Oct. '14...
Market Intelligence Center  Aug 1  Comment 
After Thursday’s trading in Grainger (W W) Inc. (GWW) the algorithms behind MarketIntelligenceCenter.com's Artifical Intelligence Center picked out a trade that offers a 2.43% or 11.36% (for comparison purposes only), while providing 4.51%...
SeekingAlpha  Jul 17  Comment 
W.W. Grainger, Inc. (NYSE:GWW) Q2 2014 Earnings Conference Call July 17, 2014, 08:00 AM ET Executives Laura Brown - Senior Vice President, Communications & Investor Relations Bill Chapman - Senior Director of Investor Relations ...
newratings.com  Jul 17  Comment 
WASHINGTON (dpa-AFX) - W.W. Grainger, Inc. (GWW), an industrial supplier of maintenance, repair and operating equipment, Thursday reported a second-quarter net earnings that declined despite a rise in sales, due mainly to higher growth and...
Wall Street Journal  Jul 17  Comment 
W.W. Grainger said its fiscal second-quarter earnings fell about 5% on employee-related restructuring costs, though the bottom line beat Wall Street expectations.
newratings.com  Jul 8  Comment 
OTTAWA (dpa-AFX) - W.W. Grainger, Inc. (GWW) said Monday that its Acklands-Grainger unit has signed an agreement to buy WFS Enterprises Inc., a distributor of tools and supplies to industrial markets in Southern Ontario and select U.S. locations....
Benzinga  Jul 7  Comment 
In a report published Monday, Credit Suisse analyst Hamzah Mazari reiterated an Outperform rating and $310.00 price target on W.W. Grainger (NYSE: GWW). In the report, Credit Suisse noted, “Although we acknowledge gross margins will not...




 
TOP CONTRIBUTORS

W.W. Grainger Inc. (NYSE: GWW) is a distributor of industrial supplies serving the maintenance, repair, and operational (MRO) needs of businesses across North America through catalog sales and approximately 600 storefront locations. Grainger sells parts in most common industrial product categories—from hydraulic pumps to drill bits. The MRO market is highly fragmented, and Grainger, with 4% market share, is by far the largest player.

Grainger aims to increase sales by reaching new customers and encouraging customers to treat Grainger as a one-stop shop for hardware purchases, including purchases they might otherwise make from a more specialized distributor. Toward those ends, Grainger is increasing store coverage in U.S. cities, recently opened a distribution center in Shanghai, and is expanding catalog offerings dramatically. Furthermore, during 2009 Grainger acquired two businesses in the U.S., one in Canada, one in India, and a majority share of a business in Japan.[1]

Grainger’s earnings in the coming years will depend on largely the health of the MRO market in the United States. Revenues may also grow relative to GDP if Grainger succeeds in increasing its customer base and sales per customer.

Company Overview

W. W. Grainger Inc. was founded in 1927 as a wholesale distributor of electric motors. By 1936, Grainger had 15 branches across the United States. By the late 1930s, Grainger had begun to move beyond motors and launched Dayton, a private label brand that Grainger still sells today. The company went public in 1967.

Business and Financial Metrics

During 2009, Grainger was able to post a net income of $431 million from total revenues of $6.2 billion.[2] Revenues declined by 9.2% when compared to its 2008 revenues of $6.9 billion. This decline was largely due to lower demand for products, as sales volume declined 14% in 2009 due to the tough economic conditions.[3] In particular, the heavy manufacturing customer sector hurt Grainger's sales the most, as their sales declined by 20% for those customers.

Business Segments

Grainger breaks its business into three reportable segments: i) United States, ii) Canada, and iii) Other Businesses.

United States

For the year ended December 31, 2009 Granger's United States segment earned a total of $5.4 billion in revenues, a decrease from its 2008 total revenues of $612 million.[3] As a result, the segment's operating income declined from $840 million in 2008 to $736 million in 2009.[4] The company attributed this decline in large part to the tough economic conditions in 2009. Heavy manufacturing customers were hit particularly hard, as net sales to these customers declined by 20%.

Canada

During 2009, Grainger's Canada segment had total revenues of $651 million, a decline of $77 million from its 2008 revenue.[4] As a result of these declining revenues, the Canada segment had its operating earnings decline by $10.5 million in 2009 to $43.7 million. Like the United States segment, these declines were largely driven by heavy manufacturing customers purchasing significantly less.

Other Businesses

Grainger's Other Businesses segment includes its operations in Mexico, Panama, Japan, Puerto Rico, and China. Net sales for other businesses increased 47.7% for 2009. The increase in net sales was due mostly to the acquisitions they made in 2009 of companies in India and Japan. Despite the increase in net sales, this segment had an operating loss of $11.6 million in 2009, which was a 1.6% improvement from its 2008 operating loss.[4]

Trends and Forces

Grainger's performance is overdependent on the United States

Because Grainger derives the great majority of its revenues from U.S. sales, it is vulnerable to downturns in the U.S. economy. This is particularly noteworthy because most of Grainger’s customers are themselves vulnerable to economic cycles. As a result, downturns in the U.S. economy hurt Grainger through lower sales, but even more so because their customers themselves are facing difficulty as well.

However, during 2009 Grainger acquired two foreign businesses, one in India and another in Japan. By expanding overseas, Grainger reduces its dependence on U.S. sales. Whether Grainger continues this trend of international expansion in the future remains to be seen.

Transportation Costs

Keeping Grainger's stores and distribution centers stocked is a significant logistical task. Fuel costs contribute significantly to the costs of stocking material and shipping to customers. As a result, rising fuel prices may force Grainger to pass on these extra costs to customers, something they may or may not be able to accomplish.

Competition

Most of Grainger’s competitors are nothing like Grainger. In the highly fragmented MRO market, Grainger’s 4% market share is larger than any other distributor’s. While Grainger originally dealt only motors and electronics, it now covers almost every industrial product category and derives no more than 15% of revenue from any single one. Most of Grainger’s competitors are small, often family-owned, local distributors that specialize in a single area. Even national distributors usually focus more on a single product category.

  • MSC Industrial Direct Company (MSM) is another general industrial supplies distributor with a big catalog, a web interface for placing orders, widely dispersed branches, and a traveling sales team. MSC emphasizes its same-day shipping guarantee (for some products) and vendor managed inventory (VMI) service while Grainger emphasizes the convenience of its many locations and its ability to drop ship material from many suppliers directly to its customers.
  • Home Depot's HD Supply Facilities Maintenance is an important newcomer to the MRO market. HD Supply Facilities Maintenance aims to serve construction projects from design to completion and beyond. HD Supply Facilities Maintenance focuses more on the construction side, as a significant portion of its sales come from lumber and other construction materials.



References

  1. GWW 10-K 2009 Item 1 Pg. 3
  2. GWW 10-K 2009 Item 8 Pg. 30
  3. 3.0 3.1 GWW 10-K 2009 Item 7 Pg. 12
  4. 4.0 4.1 4.2 GWW 10-K 2009 Item 7 Pg. 13
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki