Grainger Earnings: High-Touch Continues to Shine; Outperforms the Market by 750 Basis Points

We raised our fair value estimate for Grainger to $473 ($470 previously), following first-quarter earnings. The company reported another solid quarter, thanks to strong demand. We were impressed with Grainger’s updates on the high-touch business. Management highlighted the segment outperformed market growth by approximately 750 basis points. This is roughly in line with the company’s performance in 2022 (775 basis points of outperformance). Recall, management is targeting to outgrow the market by 400-500 basis points. We expect more of the same going forward, thanks to Grainger’s strong competitive positioning compared with peers. Our narrow-moat rating is underpinned by the company’s cost advantage, which manifests from the volume rebates it receives from suppliers (lower per unit cost).