William Blair Assigns Outperform On W.W. Grainger Shares


In a research report issued today, William Blair analyst Ryan Merkel assigned an Outperform rating on W.W. Grainger (NYSE:GWW). No price target was provided.

Merkel wrote, “Mixed results include in-line EPS, but 2014 EPS and sales guide cut by 1% 2014 EPS cut by $0.15, but higher tax rate accounts for $0.12 Given global growth fears, we view results as fairly solid Reduced annual sales growth guide to 5%-5.5% surprised us September growth at 7% slightly missed our 7.5% forecast October organic sales growth of 5% tracking slightly below our 5.5% forecast Gross margin missed our model (again)—expect this theme across peer group Canada margins improved nicely sequentially, but remain question for 2015 SG&A well controlled even with elevated investment spending EPS momentum picking up, but not a table pounder until we see 2015 guidance 2014 EPS of $12.40 likely falls to $12.25 2015 EPS of $13.85 likely falls to $13.50-$13.70 Viewpoint We were not expecting much upside with results, and Grainger met our expectations. EPS of $3.30, up 12%, basically matched consensus, but 2014 EPS guidance was cut by $0.15 at the midpoint. A higher tax rate is costing $0.12, but sales growth guidance was also lowered from a midpoint of 6% to 5%-5.5%. Investors already knew the high end of sales growth guidance at 7% was likely out of reach, but we were hopeful 6% was achievable. Grainger said outside North America it was disappointed with several multichannel businesses (we suspect Europe, China, and Brazil). It is nice to see growth in Canada improving.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ryan Merkel has a total average return of -5.8% and a 25.0% success rate. Merkel is ranked #2541 out of 3335 analysts.

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