We increased our fair value estimate for Grainger by 3% to $570 per share, up from $550 previously. Management maintained guidance, which implies volume growth for the US maintenance, repair, and operations, or MRO, industry will be flat to slightly up in 2024. Last quarter, management commented that pricing growth will likely be between 0%-1% this year.
With a more sensible, transparent pricing model, Grainger should continue to gain share with existing customers and win higher-margin midsize accounts.
Amazon Business could disrupt the industrial distribution industry, taking market share and pressuring Grainger’s margins.
|
Metric
|
GWW
|
FAST
|
MSM
|
|---|---|---|---|
Price/Earnings (Normalized) | 25.90 | 33.83 | 16.05 |
Price/Book Value | 14.54 | 11.38 | 3.78 |
Price/Sales | 2.84 | 5.29 | 1.32 |
Price/Cash Flow | 20.62 | 29.40 | 11.93 |
|
Metric
|
GWW
|
FAST
|
MSM
|
|---|---|---|---|
Quick Ratio | 1.24 | 1.98 | 0.72 |
Current Ratio | 2.19 | 4.57 | 2.01 |
Interest Coverage | 28.70 | 141.55 | 19.80 |
|
Metric
|
GWW
|
FAST
|
MSM
|
|---|---|---|---|
Return on Assets (Normalized) | 23.90% | 25.46% | 13.35% |
Return on Equity (Normalized) | 64.29% | 34.85% | 23.46% |
Return on Invested Capital (Normalized) | 33.14% | 29.44% | 17.42% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
|---|---|---|---|---|---|
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