W.W. Grainger, Inc.
fourth-quarter 2017 adjusted earnings per share of $2.94 came in higher than the prior-year figure of $2.45 by 20%. Further, earnings beat the Zacks Consensus Estimate of $2.18 by wide margin of 35%. The company witnessed strong volumes in its U.S. business driven by strategic pricing initiatives as well as an improving demand environment. Grainger’s shares gained 12.71% in pre-market trading.
Including one-time items such as restructuring charges and other charges, earnings came in at $2.63 per share in the reported quarter, up 160% from $1.01 in the year-ago quarter.
Grainger reported revenues of $2,632 million, up 6.5% from the prior-year quarter figure of $2,471 million, driven by an increase of 11 percentage point (pp) from volume growth. This was partly offset by a decline of 3 pp in price and 1 pp from the divestiture of a specialty business in the United States in mid-July. The figure also beat the Zacks Consensus Estimate of $2,568 million. There were 63 selling days in the reported quarter, same as in fourth-quarter 2016.
Cost of sales increased 8.8% year over year to $1,611 million. Gross profit increased 3% to $1,021 million from $990 million recorded in the year-ago quarter. Gross margin contracted 130 basis points (bps) to 38.8%.
Grainger’s adjusted operating income in the quarter increased 4% to $285 million from $275 million recorded in the prior-year quarter. Adjusted operating margin fell 30 bps to 10.8% in the quarter from 11.1% in the year-earlier quarter.
W.W. Grainger, Inc. Price, Consensus and EPS Surprise
In the past six months, Grainger outperformed the industry
with respect to price performance. The stock gained 56.6%, compared with industry’s growth of 27.7%.
Grainger currently carries a Zacks Rank #3 (Hold).
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Caterpillar has a long-term earnings growth rate of 10.3%. The stock has gained 48% in a year’s time.
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