W.W. Grainger Earnings: Margins EXPAND For Fifth Straight Quarter, Stock JUMPS

S&P 500 (NYSE:SPY) component W.W. Grainger Inc. (NYSE:GWW) reported its results for the second quarter. W.W. Grainger is a distributor of facilities maintenance products and provides services and related information used by businesses and institutions throughout North America.

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W.W. Grainger Inc. Earnings Cheat Sheet

Results: Net income for the industrial services rose to $190.7 million ($2.63 per share) vs. $169.9 million ($2.34 per share) in the same quarter a year earlier. This marks a rise of 12.3% from the year-earlier quarter.

Revenue: Rose 12.3% to $2.25 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: W.W. Grainger Inc. fell in line with the mean analyst estimate of $2.63 per share. Analysts were expecting revenue of $2.27 billion.

Quoting Management: “Our strong sales and earnings growth is further evidence of the value Grainger provides to professional buyers and maintenance engineers who are tasked every day with keeping their facilities up and running,” said Chairman, President and Chief Executive Officer Jim Ryan. “Businesses and institutions need a trusted partner like Grainger to deliver products and solutions that help drive down process costs and inventory carrying costs. We have a great group of people working hard to deliver for our customers every day.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 13.2%, with the biggest boost coming in the first quarter when revenue rose 16.4% from the year earlier quarter.

Last quarter, the company’s gross margin expanded 0.4 percentage point from the year-earlier quarter to 43.5%. It was the fifth consecutive quarter of gross-margin growth. During this time, margins have grown an average of 1.1 percentage points per quarter on a year-over-year basis.

The company has now seen its net income rise for three quarters in a row. In the first quarter, net income rose 18.7% and in the fourth quarter of the last fiscal year, the figure rose 12.3%.

The company fell in line with estimates last quarter after beating expectations in the previous two quarters. In the first quarter, it topped the mark by 6 cents, and in the fourth quarter of the last fiscal year, it was ahead by 2 cents.

Looking Forward: Over the past sixty days, the outlook for the company’s performance next quarter has become increasingly unfavorable. The average estimate for the third quarter is $2.95 per share, a drop from $2.97. For the fiscal year, the average estimate has moved down from $10.72 a share to $10.66 over the last sixty days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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