W.W. Grainger, Inc. Just Missed EPS By 12%: Here's What Analysts Think Will Happen Next
The yearly results for W.W. Grainger, Inc. (NYSE:GWW) were released last week, making it a good time to revisit its performance. It was not a great result overall. While revenues of US$11b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 12% to hit US$15.32 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
See our latest analysis for W.W. Grainger
Following the latest results, W.W. Grainger's 21 analysts are now forecasting revenues of US$12.0b in 2020. This would be a satisfactory 4.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to grow 19% to US$18.44. Before this earnings report, analysts had been forecasting revenues of US$12.0b and earnings per share (EPS) of US$18.41 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
Analysts reconfirmed their price target of US$329, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic W.W. Grainger analyst has a price target of US$398 per share, while the most pessimistic values it at US$278. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Further, we can compare these estimates to past performance, and see how W.W. Grainger forecasts compare to the wider market's forecast performance. Analysts are definitely expecting W.W. Grainger's growth to accelerate, with the forecast 4.4% growth ranking favourably alongside historical growth of 3.2% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 4.3% next year. W.W. Grainger is expected to grow at about the same rate as its market, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for W.W. Grainger going out to 2024, and you can see them free on our platform here..
You can also see whether W.W. Grainger is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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.
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. Thank you for reading.
