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WW Grainger Inc (GWW)

Oct 05 2010

WW Grainger Inc (GWW) is a facilities maintenance company that distributes related products and offers related services. Based in Lake Forest Illinois, the company’s stock is a member of the S&P 500. With a market cap of 8.61 billion, WW Grainger is one of the larger companies discussed on in the past month. The stock has a $2.16 a share dividend which translates into a 1.8% yearly return.

The company is ready to announce its most recent quarterly results on October 14th and has reached new 52 Week highs two times in September and is close again today in anticipation of good numbers. The company has beat earnings estimates 3 out of the last 4 times that it has announced earnings. March of 2010 the company met earnings estimates of $1.38 a share.

Current earnings estimates are $1.81 a share which has steadily risen over the past three months from $1.67 a share. Revenue is also expected to increase compared to the same period last year, 16.7%. The average revenue estimate is $1.85 billion.

The current Price to Earnings (P/E) ratio is 19.58 which means the PEG ratio is 1.32 given 22.30% earnings growth for the year. This is a little rich for a value investor but the growth rate is above average which allows the PEG to move higher than the fair value.

WW Grainger Inc was recently mentioned by SmartMoney as one of three manufacturing companies with fast sales growth. They like the growing margins the company has been able to achieve, above the industry average, by cutting costs and promoting its online sales options. The publication also mentions that WW Grainger is the industry sales leader which allows it to provide more products than others in the field.

Options trading in the stock is limited so the best method to trade the company is with the stock itself. The chart trend for the stock went positive early in September but has been in a range the past two weeks. You could wait for the earnings report in nine days and then purchase the stock when it breaks out of the range. If the range is broken prior to the earnings report, owning a small position would be ideal.

WW Grainger Inc

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