Market’s Too Pessimistic on Grainger
We share some concerns about the Amazon threat but think they’re overblown.
After Grainger’s (GWW) pricing actions caused management to reset market expectations last quarter, the narrow-moat industrial distributor’s second-quarter performance slightly exceeded our margin expectations.
We now forecast the company to generate a 10.4% adjusted operating margin in 2017 versus our previous 10.2% estimate; however, our increased estimate is still at the low end of management’s guidance range. We have not materially changed any of our longer-term key valuation assumptions, and we are therefore maintaining our $202 fair value estimate.
Brian Bernard does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.