07. W.W. Grainger, Inc. (NYSE:GWW)
Number of Hedge Fund Holders: 32
W.W. Grainger, Inc. (NYSE:GWW) is a leading industrial distribution company, making it a strong contender for inclusion in our list of ten best industrial distribution stocks to buy now. The company distributes maintenance, repair, and operating (MRO) products and services across North America, Japan, the UK, and other international markets. With two primary business segments, High-Touch Solutions N.A. and Endless Assortment, W.W. Grainger, Inc. (NYSE:GWW) offers a wide range of products, including safety and security equipment, plumbing supplies, metalworking tools, and technical support services. As of Q2 2024, 32 hedge funds held positions in the stock, down from 36 in the previous quarter, highlighting its continued appeal to institutional investors.
W.W. Grainger, Inc. (NYSE:GWW) Q2 2024 earnings report was solid, with the company beating earnings expectations. The reported earnings per share (EPS) of $9.76 surpassed analysts’ estimates of $9.59, reflecting a strong financial performance despite a challenging macroeconomic environment. The company’s total sales grew by 3.1%, or 5.1% on a daily organic constant currency basis, showing resilience in both of its business segments. The High-Touch Solutions segment, which contributed significantly to the company’s growth, saw solid volume increases and moderate price improvements, driven by its strong position in the MRO market. Operating margins for the total company stood at 15.4%, demonstrating strong profitability despite a slight year-over-year decline due to increased investments in demand generation.
W.W. Grainger, Inc. (NYSE:GWW) financial health is further highlighted by its return on invested capital (ROIC) of 42.6%, showcasing the company’s ability to efficiently allocate capital and generate substantial returns for shareholders. Additionally, Grainger returned $345 million to shareholders in the quarter through dividends and share repurchases, reflecting its commitment to creating shareholder value. In summary, W.W. Grainger, Inc. (NYSE:GWW) solid fundamentals, robust EPS growth, and efficient operations make it a strong industrial distribution stock to consider. Despite some headwinds such as yen devaluation, the company’s financial metrics and strategic growth initiatives position it well for long-term success.
ClearBridge Multi Cap Growth Strategy stated the following regarding W.W. Grainger, Inc. (NYSE:GWW) in its first quarter 2024 investor letter:
“W.W. Grainger, Inc. (NYSE:GWW), in the industrials sector, was our largest new buy. Grainger is the biggest industrial maintenance, repair, and operations distributor in North America. The company is a share gainer in a large and fragmented market, with less than 10% share of the addressable market for their direct, “high touch solutions” business estimated at more than $165 billion. Grainger has also barely scratched the surface with its online “endless assortment” platform, Zoro.com, which targets an even larger market. In addition to its growth and profit potential, we are attracted to Grainger’s strong balance sheet and improved capital allocation under its current management.”
