What Should Investors Know About W.W. Grainger, Inc.'s (NYSE:GWW) Growth?

Simply Wall St

After W.W. Grainger, Inc.'s (NYSE:GWW) earnings announcement in December 2018, analysts seem cautiously optimistic, with profits predicted to increase by 28% next year compared with the past 5-year average growth rate of -4.9%. By 2020, we can expect W.W. Grainger’s bottom line to reach US$997m, a jump from the current trailing-twelve-month of US$776m. Below is a brief commentary on the longer term outlook the market has for W.W. Grainger. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for W.W. Grainger

What can we expect from W.W. Grainger in the longer term?

Longer term expectations from the 23 analysts covering GWW’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:GWW Past and Future Earnings, April 23rd 2019

By 2022, GWW's earnings should reach US$1.1b, from current levels of US$776m, resulting in an annual growth rate of 9.5%. This leads to an EPS of $20.7 in the final year of projections relative to the current EPS of $13.82. With a current profit margin of 6.9%, this movement will result in a margin of 8.4% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For W.W. Grainger, there are three pertinent factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is W.W. Grainger worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether W.W. Grainger is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of W.W. Grainger? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.