Grainger Stock Jumps on Earnings, Revenue Beat as Momentum 'Remains Real'

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By Sam Boughedda

Grainger (NYSE:GWW) shares rallied 6% Friday following its second-quarter earnings report in which it beat consensus estimates.

The company posted earnings of $7.19 per share, $0.55 above the analyst estimate of $6.64. At the same time, revenue was also a beat, coming in at $3.8 billion, up 19.6%, compared to the second quarter of 2021, beating the consensus estimate of $3.7 billion.

Grainger's High-Touch Solutions segment saw sales rise 22.2% year-over-year on strong price realization and volume growth, while its Endless Assortment segment sales increased 11.4%, based on the "significant impact of the depreciating Japanese yen."

The industrial supply company stated segment revenue growth continues to be driven by new customer acquisitions at Zoro and MonotaRO and strong repeat and enterprise customer growth at MonotaRO.

"Our execution on our strategic initiatives is driving sustained growth and share gain across the business," said DG Macpherson, Grainger's Chairman and CEO.

Looking ahead, the company sees fiscal 2022 earnings per share of between $27.25 and $28.75 versus the consensus of $26.56. In addition, it sees daily sales growth of 14.5% to 16.5%.

"After another quarter that exceeded expectations, we are increasing our 2022 outlook and remain well-positioned to deliver an exceptionally strong year," added Macpherson.

Following the report, an Oppenheimer analyst maintained an Outperform rating.

"W.W. Grainger reported sales of $3.84B/+20% (+22% organic daily sales) vs. our in-line $3.70B/+15.5% estimate, with EPS of $7.19/+68% vs. our $6.74/+58% estimate/ $6.64 consensus.," he said. "The gross margin outlook was improved to 37.2-37.5% from 36.8-37.3%."

"All below line was in-line; the upside from sales upside and EBIT +60% vs. our +51% estimate. Momentum remains real, and we expect share gain accrual to be fundamentally sticky and further scalable over the long term," the analyst concluded.