Investment Rating - The investment rating for the company is "Buy" [1] Core Insights - The company's Q4 2024 performance showed steady growth, with revenue increasing by 5.9% year-on-year to $4,233 million, and net profit rising by 16.6% to $9.71 per share. Overall, the annual performance for 2024 met expectations [1][5] - The HTS business segment demonstrated solid growth, with Q4 revenue up 4.0% to $3,342 million, outperforming the MRO industry growth rate of 2.0-2.5%. The segment's operating profit increased by 7.6% to $567 million, supported by improved gross margins [1][5] - The EA business segment also performed well, with Q4 revenue rising 15.1% to $816 million and operating profit increasing by 27.3% to $70 million [1][5] - The company provided a conservative revenue guidance for 2025, expecting a growth of 2.7%-5.2% to $17.6-$18.1 billion, reflecting the challenging economic environment [1][5] - The company is projected to achieve revenue growth of 2.8%, 2.6%, and 7.1% for 2025, 2026, and 2027, respectively, with corresponding net profit growth of 0.3%, 5.6%, and 11.0% [1][5] Financial Summary - For 2024, the company forecasts revenue of $17.2 billion, with a year-on-year growth of 4.2%. The operating profit margin is expected to be 15.5%, and earnings per share (EPS) is projected at $38.96, reflecting a 6.2% increase [1][6] - The company's financial metrics indicate a P/E ratio of 26.61 for 2024, decreasing to 22.64 by 2027, suggesting a potential for value appreciation over time [1][6] - The total assets are projected to grow from $8.83 billion in 2024 to $10.54 billion by 2027, indicating a healthy balance sheet [1][6]

NYSE: GWW Q4 2024 Earnings Call January 31, 2025 Safe Harbor Statement and Non-GAAP Financial Measures All statements in this communication, other than those relating to historical facts, are "forward-looking statements." Forward-looking statements can generally be identified by their use of terms such as "anticipate," "estimate," "believe," "expect," "could," "forecast," "may," "predict," "project," "will," "continue," "commit," "target," "guidance," "deliver," or "beyond" and similar terms and phrases, in ...

Core Viewpoint - W.W. Grainger, Inc. reported mixed financial results for the fourth quarter of 2024, with adjusted earnings per share (EPS) slightly missing estimates, while sales showed modest growth but also fell short of expectations [1][3]. Financial Performance - Adjusted EPS for Q4 2024 was $9.71, missing the Zacks Consensus Estimate of $9.75 [1]. - Quarterly sales increased by 5.9% year over year to $4.23 billion, but missed the Zacks Consensus Estimate of $4.24 billion [3]. - Daily sales rose 4.2% from the prior-year quarter, surpassing the predicted increase of 3.8% [3]. Segment Performance - The High-Touch Solutions N.A. segment's daily sales grew by 2.3% year over year, driven by growth across all geographies, although it fell short of the predicted 5% organic growth [4]. - The Endless Assortment segment saw a significant daily sales increase of 13.3%, attributed to customer acquisitions and growth at MonotaRO, exceeding the expected 8.7% organic growth [5]. Operational Metrics - Cost of sales rose by 5.1% year over year to $2.56 billion, while gross profit increased by 7.2% to $1.68 billion, resulting in a gross margin of 39.6%, up from 39.1% in the prior year [6]. - Selling, general, and administrative expenses increased by 3.7% to $1.04 billion, with operating income rising 19% to $663 million, leading to an operating margin of 15% compared to 13.9% in the previous year [6]. Cash Flow and Balance Sheet - Cash and cash equivalents at the end of 2024 were $1.04 billion, up from $0.67 billion at the end of 2023 [7]. - Cash flow from operating activities was $2.11 billion in 2024, compared to $2.03 billion in the previous year [7]. - Long-term debt stood at $2.28 billion as of December 31, 2024, slightly up from $2.27 billion at the end of 2023 [8]. Annual Performance - Adjusted EPS for 2024 rose by 23.6% year over year to $38.96, beating the Zacks Consensus Estimate of $38.95 [9]. - Total sales improved by 4.2% year over year to $17.17 billion, aligning with the company's guidance of $17.1-$17.3 billion [9]. Future Outlook - For 2025, the company expects net sales between $17.6 billion and $18.1 billion, with sales growth projected at 2.7-5.2% and EPS anticipated to be between $39.00 and $41.50 [10]. Stock Performance - Over the past year, GWW shares have increased by 23%, significantly outperforming the industry average growth of 5.9% [11].

Core Viewpoint - W.W. Grainger reported quarterly earnings of $9.71 per share, slightly missing the consensus estimate of $9.75 per share, but showing an increase from $8.33 per share a year ago, indicating a year-over-year growth despite the earnings miss [1][2]. Financial Performance - The company posted revenues of $4.23 billion for the quarter ended December 2024, which was a slight miss against the Zacks Consensus Estimate by 0.04%, but an increase from $4 billion in the same quarter last year [2]. - Over the last four quarters, W.W. Grainger has surpassed consensus EPS estimates two times, but has not been able to beat consensus revenue estimates during this period [2]. Stock Performance - W.W. Grainger shares have increased approximately 6.8% since the beginning of the year, outperforming the S&P 500's gain of 3.2% [3]. - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6]. Future Outlook - The current consensus EPS estimate for the upcoming quarter is $10.31 on revenues of $4.41 billion, and for the current fiscal year, it is $41.91 on revenues of $18.15 billion [7]. - The outlook for the industry, particularly the Industrial Services sector, is currently in the bottom 18% of over 250 Zacks industries, which may impact the stock's performance [8].

Sales Performance - Fourth quarter 2024 sales reached $4.2 billion, an increase of 5.9%, or 4.7% on a daily, organic constant currency basis compared to Q4 2023[2] - Full year 2024 sales totaled $17.2 billion, up 4.2%, or 4.7% on a daily, organic constant currency basis compared to the previous year[2] - Net sales for Q4 2024 reached $4,233 million, a 5.9% increase from $3,997 million in Q4 2023[27] - Daily, organic constant currency sales increased by 4.7% for FY 2024, with a 13.2% increase in Endless Assortment[42] - The company experienced a daily sales decline of 1.7% in Q4 2024 due to foreign currency exchange impacts[42] Profitability Metrics - Operating margin for Q4 2024 was 15.0%, a 110 basis point increase from the prior year, while the full year operating margin was 15.4%, down 20 basis points[3][14] - Gross profit margin for Q4 2024 was 39.6%, an increase of 50 basis points compared to Q4 2023, while the full year gross profit margin remained flat at 39.4%[10][11] - Diluted EPS for Q4 2024 was $9.71, up 23.1% on a reported basis, and $38.71 for the full year, up 6.8%[13][15] - Basic earnings per share for Q4 2024 were $9.74, up 22.8% from $7.93 in Q4 2023[27] - Net earnings attributable to W.W. Grainger, Inc. for Q4 2024 were $475 million, representing a 20.3% increase from $395 million in Q4 2023[27] - Net earnings attributable to W.W. Grainger, Inc. for FY 2024 were $1,909 million, with a diluted earnings per share of $38.71[45] Cash Flow and Capital Expenditures - The company generated $2.1 billion in operating cash flow for the full year 2024, an increase of 3.9% compared to 2023[19] - Free cash flow (FCF) for Q4 2024 was $170 million, and for FY 2024 it was $1,570 million[43] - The company reported net cash provided by operating activities of $2,111 million for the twelve months ended December 31, 2024, compared to $2,031 million for the same period in 2023[31] - Capital expenditures for the twelve months ended December 31, 2024, were $541 million, up from $445 million in 2023[31] Shareholder Returns - The company returned $1.6 billion to shareholders through dividends and share repurchases in 2024[19] Tax and Expenses - The effective tax rate for the full year 2024 was 23.0%, down from 23.9% in 2023[16] - The effective tax rate for the fourth quarter of 2024 was 20.1%[45] - SG&A expenses for FY 2024 were $4,121 million, representing 24.0% of net sales[45] Segment Performance - In the High-Touch Solutions N.A. segment, sales increased by 4.0%, while the Endless Assortment segment saw a 15.1% increase compared to Q4 2023[8] Balance Sheet Highlights - Cash and cash equivalents at the end of Q4 2024 were $1,036 million, an increase from $660 million at the end of Q4 2023[31] - Total assets as of December 31, 2024, were $8,829 million, compared to $8,147 million as of December 31, 2023[29] - Total current liabilities increased to $2,305 million as of December 31, 2024, from $1,831 million as of December 31, 2023[29] Future Projections - For 2025, the company projects net sales between $17.6 billion and $18.1 billion, with daily, constant currency sales growth expected to be between 4.0% and 6.5%[20] - There were 256 U.S. selling days in FY 2024, compared to 254 in FY 2023[42]

Core Insights - Grainger reported a 5.9% increase in sales for Q4 2024, reaching $4.2 billion, and a 4.2% increase for the full year 2024, totaling $17.2 billion [1][5][6] - The company issued guidance for 2025, projecting net sales between $17.6 billion and $18.1 billion, with a sales growth rate of 2.7% to 5.2% [19][20] Financial Performance - Q4 2024 gross profit was $1.676 billion, reflecting a 7.2% increase year-over-year, with a gross profit margin of 39.6% [3][9] - Operating earnings for Q4 2024 were reported at $633 million, a 13.6% increase compared to Q4 2023, resulting in an operating margin of 15.0% [11][13] - Diluted earnings per share (EPS) for Q4 2024 increased to $9.71, up 23.1% from the previous year [12][14] Segment Performance - In the High-Touch Solutions N.A. segment, sales grew by 4.0%, while the Endless Assortment segment saw a significant increase of 15.1% [7][8] - For the full year 2024, both segments contributed to an overall sales increase of 4.2% [8] Cash Flow and Shareholder Returns - The company generated $2.1 billion in operating cash flow for the full year 2024, with free cash flow of $1.6 billion [18] - Grainger returned $1.6 billion to shareholders through dividends and share repurchases during 2024 [18] 2025 Guidance - The company anticipates a gross profit margin of 39.1% to 39.4% and an operating margin of 15.1% to 15.5% for 2025 [20] - Projected diluted EPS for 2025 is expected to be between $39.00 and $41.50 [20]

Core Viewpoint - W.W. Grainger, Inc. is expected to report strong fourth-quarter results, with revenue and earnings estimates indicating significant year-over-year growth [2][5]. Revenue Estimates - The Zacks Consensus Estimate for Grainger's revenues is $4.23 billion, reflecting a 5.9% increase from the previous year [2]. - The High-Touch Solutions segment is projected to generate revenues of $3.36 billion, up 4.6% from the same quarter last year [9]. - The Endless Assortment segment is expected to achieve revenues of $770 million, representing an 8.7% increase year-over-year [10]. Earnings Estimates - The consensus estimate for earnings is $9.75 per share, indicating a 17.1% growth compared to the previous year [2]. - Grainger has an Earnings ESP of +0.59%, suggesting a favorable outlook for an earnings beat [6]. Performance Trends - Grainger has shown strong growth in core product sales and has been enhancing its e-commerce and digital capabilities [7]. - Organic daily sales growth is expected to be 4.1% overall, with the High-Touch Solutions segment projected to grow by 5% [7][8]. Historical Performance - Grainger has beaten the Zacks Consensus Estimates in three of the last four quarters, with an average surprise of 1.2% [3][4]. Cost Considerations - The company has faced elevated material and freight costs, which, along with higher operating expenses, may negatively impact margins [11]. Stock Performance - Grainger's stock has increased by 24.7% over the past year, outperforming the industry average growth of 8.6% [12].

Growth Drivers - The company is benefiting from volume growth in the High Touch Solutions segment and customer growth in the Endless Assortment segment [1] - The High-Touch Solutions segment is gaining from an improved product mix, while repeat customer growth at MonotaRO is aiding the Endless Assortment segment [1] - Volume improvement and pricing actions are driving the company's performance [2] - The High-Touch Solutions North America segment is experiencing continued volume growth across all geographies and strong price realization, with gross margin driven by an improved product mix [3] - The Endless Assortment segment is supported by customer acquisition and repeat customer growth at MonotaRO [3] - The High-Touch Solutions model serves customers with complex buying needs, primarily in North America, creating tailored solutions and deep customer relationships [4] - The company creates value through sales and service representatives, technical product support, fulfillment capabilities, and inventory management solutions [5] - The High-Touch Solutions market outperformed the U S MRO market in all quarters of 2023 and the first two quarters of 2024 [5] - The company is focused on re-engaging lapsed customers and acquiring new ones, with continued growth among large and mid-sized customers in the United States [5] Strategic Initiatives - The company is investing in e-commerce and digital capabilities to improve the end-to-end customer experience [6] - Grainger is executing improvement initiatives within its supply chain and developing online capabilities for a personalized customer experience through Grainger com, eProcurement connections, and mobile applications [6] - Effective inventory management and incremental investments in marketing and merchandising are driving profitability [7] Near-Term Challenges - The company is experiencing higher SG&A expenses due to increased headcount, compensation costs, and marketing investments, which may affect margins in upcoming quarters [8] - Product shortages, delays, overseas freight pressures, port congestion, container challenges, and rising fuel prices are driving costs [9] Stock Performance - Grainger's shares have gained 28% in the past year, outperforming the industry's growth of 10 1% [10] Industry Comparison - Graham Corporation (GHM) has a Zacks Rank 1 (Strong Buy) with an average trailing four-quarter earnings surprise of 101 85% and a 127% share price increase in a year [13] - Applied Industrial Technologies (AIT) has a Zacks Rank 2 (Buy) with an average trailing four-quarter earnings surprise of 4 9% and a 46 4% share price increase in a year [14] - Tenaris S A (TS) has a Zacks Rank 2 (Buy) with an average trailing four-quarter earnings surprise of 24 5% and a 25 5% share price increase in a year [14]

Core Insights - Dividend-growth investing is a reliable strategy for building wealth, particularly for retirement planning, as it offers steady income streams that can outpace inflation [1] - Successful investors focus on companies that can sustain and grow their dividends over decades, providing both growing income and potential long-term capital appreciation [2] Company Analysis - **Target (TGT)**: - Has a 53-year history of consecutive dividend increases and offers a 3.43% yield with a conservative 47.5% payout ratio [5] - The dividend has grown at a 10.7% annual rate over the past five years, one of the fastest among big-box retailers [5] - Shares trade at 13 times forward earnings, significantly below the S&P 500's multiple of nearly 24, indicating a compelling valuation [6] - **Parker-Hannifin (PH)**: - Maintains a 68-year streak of consecutive dividend increases with a modest yield of 0.93% and a low 28% payout ratio [7] - The five-year dividend growth rate is 13.9%, suggesting room for future increases [7] - Trades at 25.9 times forward earnings, reflecting a premium valuation due to its technological expertise and strong fundamentals [8] - **W.W. Grainger (GWW)**: - Offers 53 consecutive years of dividend growth with a conservative 21.2% payout ratio and a yield of 0.68% [9] - The five-year dividend growth rate is 6.4%, indicating a balanced approach to shareholder returns [9] - Shares trade at 28.8 times forward earnings, justified by its vast distribution network and strong customer relationships [10] Investment Strategy - Identifying companies like Target, Parker-Hannifin, and W.W. Grainger that can sustain and grow dividends through various market conditions is essential for building a solid foundation for retirement income [11] - These companies demonstrate a commitment to shareholders through decades of dividend increases and conservative financial management, making them ideal candidates for a diversified retirement portfolio [11]

Company Overview - W.W. Grainger Inc. is a broad line, business-to-business distributor of maintenance, repair, and operating (MRO) products and services, incorporated in 1928 [13] - The company's operations are primarily in North America, Japan, and the U.K., serving a wide array of industries including government, manufacturing, transportation, commercial, and contractors [13] Investment Insights - W.W. Grainger has a Zacks Rank of 3 (Hold) and a VGM Score of A, indicating a solid position in the market [14] - The company has a Momentum Style Score of B, with shares increasing by 10.1% over the past four weeks [14] - Six analysts have revised their earnings estimates upwards for fiscal 2024, with the Zacks Consensus Estimate increasing by $0.17 to $38.92 per share [14] - W.W. Grainger boasts an average earnings surprise of 1.2%, suggesting potential for positive performance [14] - With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, W.W. Grainger is recommended for investors' consideration [15]