Investment Rating - The investment rating for the company is "Buy" [1] Core Insights - The company's Q4 2024 performance showed steady growth, with revenue increasing by 5.9% year-on-year to $4,233 million, and net profit rising by 16.6% to $9.71 per share. Overall, the annual performance for 2024 met expectations [1][5] - The HTS business segment demonstrated solid growth, with Q4 revenue up 4.0% to $3,342 million, outperforming the MRO industry growth rate of 2.0-2.5%. The segment's operating profit increased by 7.6% to $567 million, supported by improved gross margins [1][5] - The EA business segment also performed well, with Q4 revenue rising 15.1% to $816 million and operating profit increasing by 27.3% to $70 million [1][5] - The company provided a conservative revenue guidance for 2025, expecting a growth of 2.7%-5.2% to $17.6-$18.1 billion, reflecting the challenging economic environment [1][5] - The company is projected to achieve revenue growth of 2.8%, 2.6%, and 7.1% for 2025, 2026, and 2027, respectively, with corresponding net profit growth of 0.3%, 5.6%, and 11.0% [1][5] Financial Summary - For 2024, the company forecasts revenue of $17.2 billion, with a year-on-year growth of 4.2%. The operating profit margin is expected to be 15.5%, and earnings per share (EPS) is projected at $38.96, reflecting a 6.2% increase [1][6] - The company's financial metrics indicate a P/E ratio of 26.61 for 2024, decreasing to 22.64 by 2027, suggesting a potential for value appreciation over time [1][6] - The total assets are projected to grow from $8.83 billion in 2024 to $10.54 billion by 2027, indicating a healthy balance sheet [1][6]

Financial Performance - Total company sales increased by 5.9% to $4.233 billion in Q4 2024, with daily sales up by 4.2%[37] - High-Touch Solutions N A sales increased by 4 0% to $3 342 billion in Q4 2024, with daily sales up by 2 3%[42,43] - Endless Assortment sales increased by 15 1% to $816 million in Q4 2024, with daily sales up by 13 3%[54] - The company projects 2025 total sales between $17 6 billion and $18 1 billion, implying a daily constant currency sales growth of 4 0% to 6 5%[65] - Diluted EPS increased by 16 6% to $9 71 in Q4 2024[37,40] Profitability - Total company gross profit margin increased by 50 bps to 39 6% in Q4 2024[37,38] - High-Touch Solutions N A gross profit margin increased by 90 bps to 42 3% in Q4 2024[42,44] - Total company operating margin increased by 40 bps to 15 0% in Q4 2024[37,39] - The company anticipates a 2025 operating margin between 15 1% and 15 5%[69] Market Outgrowth - The company delivered a full-year 2024 total MRO market outgrowth of approximately 100 bps in High-Touch Solutions U S [33,46] - When removing the price component, the company delivered a full-year 2024 volume outgrowth of approximately 325 bps in High-Touch Solutions U S [47,51]

Core Viewpoint - W.W. Grainger, Inc. reported mixed financial results for the fourth quarter of 2024, with adjusted earnings per share (EPS) slightly missing estimates, while sales showed modest growth but also fell short of expectations [1][3]. Financial Performance - Adjusted EPS for Q4 2024 was $9.71, missing the Zacks Consensus Estimate of $9.75 [1]. - Quarterly sales increased by 5.9% year over year to $4.23 billion, but missed the Zacks Consensus Estimate of $4.24 billion [3]. - Daily sales rose 4.2% from the prior-year quarter, surpassing the predicted increase of 3.8% [3]. Segment Performance - The High-Touch Solutions N.A. segment's daily sales grew by 2.3% year over year, driven by growth across all geographies, although it fell short of the predicted 5% organic growth [4]. - The Endless Assortment segment saw a significant daily sales increase of 13.3%, attributed to customer acquisitions and growth at MonotaRO, exceeding the expected 8.7% organic growth [5]. Operational Metrics - Cost of sales rose by 5.1% year over year to $2.56 billion, while gross profit increased by 7.2% to $1.68 billion, resulting in a gross margin of 39.6%, up from 39.1% in the prior year [6]. - Selling, general, and administrative expenses increased by 3.7% to $1.04 billion, with operating income rising 19% to $663 million, leading to an operating margin of 15% compared to 13.9% in the previous year [6]. Cash Flow and Balance Sheet - Cash and cash equivalents at the end of 2024 were $1.04 billion, up from $0.67 billion at the end of 2023 [7]. - Cash flow from operating activities was $2.11 billion in 2024, compared to $2.03 billion in the previous year [7]. - Long-term debt stood at $2.28 billion as of December 31, 2024, slightly up from $2.27 billion at the end of 2023 [8]. Annual Performance - Adjusted EPS for 2024 rose by 23.6% year over year to $38.96, beating the Zacks Consensus Estimate of $38.95 [9]. - Total sales improved by 4.2% year over year to $17.17 billion, aligning with the company's guidance of $17.1-$17.3 billion [9]. Future Outlook - For 2025, the company expects net sales between $17.6 billion and $18.1 billion, with sales growth projected at 2.7-5.2% and EPS anticipated to be between $39.00 and $41.50 [10]. Stock Performance - Over the past year, GWW shares have increased by 23%, significantly outperforming the industry average growth of 5.9% [11].

Core Viewpoint - W.W. Grainger reported quarterly earnings of $9.71 per share, slightly missing the consensus estimate of $9.75 per share, but showing an increase from $8.33 per share a year ago, indicating a year-over-year growth despite the earnings miss [1][2]. Financial Performance - The company posted revenues of $4.23 billion for the quarter ended December 2024, which was a slight miss against the Zacks Consensus Estimate by 0.04%, but an increase from $4 billion in the same quarter last year [2]. - Over the last four quarters, W.W. Grainger has surpassed consensus EPS estimates two times, but has not been able to beat consensus revenue estimates during this period [2]. Stock Performance - W.W. Grainger shares have increased approximately 6.8% since the beginning of the year, outperforming the S&P 500's gain of 3.2% [3]. - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6]. Future Outlook - The current consensus EPS estimate for the upcoming quarter is $10.31 on revenues of $4.41 billion, and for the current fiscal year, it is $41.91 on revenues of $18.15 billion [7]. - The outlook for the industry, particularly the Industrial Services sector, is currently in the bottom 18% of over 250 Zacks industries, which may impact the stock's performance [8].

Sales Performance - Fourth quarter 2024 sales reached $4.2 billion, an increase of 5.9%, or 4.7% on a daily, organic constant currency basis compared to Q4 2023[2] - Full year 2024 sales totaled $17.2 billion, up 4.2%, or 4.7% on a daily, organic constant currency basis compared to the previous year[2] - Net sales for Q4 2024 reached $4,233 million, a 5.9% increase from $3,997 million in Q4 2023[27] - Daily, organic constant currency sales increased by 4.7% for FY 2024, with a 13.2% increase in Endless Assortment[42] - The company experienced a daily sales decline of 1.7% in Q4 2024 due to foreign currency exchange impacts[42] Profitability Metrics - Operating margin for Q4 2024 was 15.0%, a 110 basis point increase from the prior year, while the full year operating margin was 15.4%, down 20 basis points[3][14] - Gross profit margin for Q4 2024 was 39.6%, an increase of 50 basis points compared to Q4 2023, while the full year gross profit margin remained flat at 39.4%[10][11] - Diluted EPS for Q4 2024 was $9.71, up 23.1% on a reported basis, and $38.71 for the full year, up 6.8%[13][15] - Basic earnings per share for Q4 2024 were $9.74, up 22.8% from $7.93 in Q4 2023[27] - Net earnings attributable to W.W. Grainger, Inc. for Q4 2024 were $475 million, representing a 20.3% increase from $395 million in Q4 2023[27] - Net earnings attributable to W.W. Grainger, Inc. for FY 2024 were $1,909 million, with a diluted earnings per share of $38.71[45] Cash Flow and Capital Expenditures - The company generated $2.1 billion in operating cash flow for the full year 2024, an increase of 3.9% compared to 2023[19] - Free cash flow (FCF) for Q4 2024 was $170 million, and for FY 2024 it was $1,570 million[43] - The company reported net cash provided by operating activities of $2,111 million for the twelve months ended December 31, 2024, compared to $2,031 million for the same period in 2023[31] - Capital expenditures for the twelve months ended December 31, 2024, were $541 million, up from $445 million in 2023[31] Shareholder Returns - The company returned $1.6 billion to shareholders through dividends and share repurchases in 2024[19] Tax and Expenses - The effective tax rate for the full year 2024 was 23.0%, down from 23.9% in 2023[16] - The effective tax rate for the fourth quarter of 2024 was 20.1%[45] - SG&A expenses for FY 2024 were $4,121 million, representing 24.0% of net sales[45] Segment Performance - In the High-Touch Solutions N.A. segment, sales increased by 4.0%, while the Endless Assortment segment saw a 15.1% increase compared to Q4 2023[8] Balance Sheet Highlights - Cash and cash equivalents at the end of Q4 2024 were $1,036 million, an increase from $660 million at the end of Q4 2023[31] - Total assets as of December 31, 2024, were $8,829 million, compared to $8,147 million as of December 31, 2023[29] - Total current liabilities increased to $2,305 million as of December 31, 2024, from $1,831 million as of December 31, 2023[29] Future Projections - For 2025, the company projects net sales between $17.6 billion and $18.1 billion, with daily, constant currency sales growth expected to be between 4.0% and 6.5%[20] - There were 256 U.S. selling days in FY 2024, compared to 254 in FY 2023[42]

Core Insights - Grainger reported a 5.9% increase in sales for Q4 2024, reaching $4.2 billion, and a 4.2% increase for the full year 2024, totaling $17.2 billion [1][5][6] - The company issued guidance for 2025, projecting net sales between $17.6 billion and $18.1 billion, with a sales growth rate of 2.7% to 5.2% [19][20] Financial Performance - Q4 2024 gross profit was $1.676 billion, reflecting a 7.2% increase year-over-year, with a gross profit margin of 39.6% [3][9] - Operating earnings for Q4 2024 were reported at $633 million, a 13.6% increase compared to Q4 2023, resulting in an operating margin of 15.0% [11][13] - Diluted earnings per share (EPS) for Q4 2024 increased to $9.71, up 23.1% from the previous year [12][14] Segment Performance - In the High-Touch Solutions N.A. segment, sales grew by 4.0%, while the Endless Assortment segment saw a significant increase of 15.1% [7][8] - For the full year 2024, both segments contributed to an overall sales increase of 4.2% [8] Cash Flow and Shareholder Returns - The company generated $2.1 billion in operating cash flow for the full year 2024, with free cash flow of $1.6 billion [18] - Grainger returned $1.6 billion to shareholders through dividends and share repurchases during 2024 [18] 2025 Guidance - The company anticipates a gross profit margin of 39.1% to 39.4% and an operating margin of 15.1% to 15.5% for 2025 [20] - Projected diluted EPS for 2025 is expected to be between $39.00 and $41.50 [20]

Core Viewpoint - W.W. Grainger, Inc. is expected to report strong fourth-quarter results, with revenue and earnings estimates indicating significant year-over-year growth [2][5]. Revenue Estimates - The Zacks Consensus Estimate for Grainger's revenues is $4.23 billion, reflecting a 5.9% increase from the previous year [2]. - The High-Touch Solutions segment is projected to generate revenues of $3.36 billion, up 4.6% from the same quarter last year [9]. - The Endless Assortment segment is expected to achieve revenues of $770 million, representing an 8.7% increase year-over-year [10]. Earnings Estimates - The consensus estimate for earnings is $9.75 per share, indicating a 17.1% growth compared to the previous year [2]. - Grainger has an Earnings ESP of +0.59%, suggesting a favorable outlook for an earnings beat [6]. Performance Trends - Grainger has shown strong growth in core product sales and has been enhancing its e-commerce and digital capabilities [7]. - Organic daily sales growth is expected to be 4.1% overall, with the High-Touch Solutions segment projected to grow by 5% [7][8]. Historical Performance - Grainger has beaten the Zacks Consensus Estimates in three of the last four quarters, with an average surprise of 1.2% [3][4]. Cost Considerations - The company has faced elevated material and freight costs, which, along with higher operating expenses, may negatively impact margins [11]. Stock Performance - Grainger's stock has increased by 24.7% over the past year, outperforming the industry average growth of 8.6% [12].

Growth Drivers - The company is benefiting from volume growth in the High Touch Solutions segment and customer growth in the Endless Assortment segment [1] - The High-Touch Solutions segment is gaining from an improved product mix, while repeat customer growth at MonotaRO is aiding the Endless Assortment segment [1] - Volume improvement and pricing actions are driving the company's performance [2] - The High-Touch Solutions North America segment is experiencing continued volume growth across all geographies and strong price realization, with gross margin driven by an improved product mix [3] - The Endless Assortment segment is supported by customer acquisition and repeat customer growth at MonotaRO [3] - The High-Touch Solutions model serves customers with complex buying needs, primarily in North America, creating tailored solutions and deep customer relationships [4] - The company creates value through sales and service representatives, technical product support, fulfillment capabilities, and inventory management solutions [5] - The High-Touch Solutions market outperformed the U S MRO market in all quarters of 2023 and the first two quarters of 2024 [5] - The company is focused on re-engaging lapsed customers and acquiring new ones, with continued growth among large and mid-sized customers in the United States [5] Strategic Initiatives - The company is investing in e-commerce and digital capabilities to improve the end-to-end customer experience [6] - Grainger is executing improvement initiatives within its supply chain and developing online capabilities for a personalized customer experience through Grainger com, eProcurement connections, and mobile applications [6] - Effective inventory management and incremental investments in marketing and merchandising are driving profitability [7] Near-Term Challenges - The company is experiencing higher SG&A expenses due to increased headcount, compensation costs, and marketing investments, which may affect margins in upcoming quarters [8] - Product shortages, delays, overseas freight pressures, port congestion, container challenges, and rising fuel prices are driving costs [9] Stock Performance - Grainger's shares have gained 28% in the past year, outperforming the industry's growth of 10 1% [10] Industry Comparison - Graham Corporation (GHM) has a Zacks Rank 1 (Strong Buy) with an average trailing four-quarter earnings surprise of 101 85% and a 127% share price increase in a year [13] - Applied Industrial Technologies (AIT) has a Zacks Rank 2 (Buy) with an average trailing four-quarter earnings surprise of 4 9% and a 46 4% share price increase in a year [14] - Tenaris S A (TS) has a Zacks Rank 2 (Buy) with an average trailing four-quarter earnings surprise of 24 5% and a 25 5% share price increase in a year [14]

Core Insights - Dividend-growth investing is a reliable strategy for building wealth, particularly for retirement planning, as it offers steady income streams that can outpace inflation [1] - Successful investors focus on companies that can sustain and grow their dividends over decades, providing both growing income and potential long-term capital appreciation [2] Company Analysis - **Target (TGT)**: - Has a 53-year history of consecutive dividend increases and offers a 3.43% yield with a conservative 47.5% payout ratio [5] - The dividend has grown at a 10.7% annual rate over the past five years, one of the fastest among big-box retailers [5] - Shares trade at 13 times forward earnings, significantly below the S&P 500's multiple of nearly 24, indicating a compelling valuation [6] - **Parker-Hannifin (PH)**: - Maintains a 68-year streak of consecutive dividend increases with a modest yield of 0.93% and a low 28% payout ratio [7] - The five-year dividend growth rate is 13.9%, suggesting room for future increases [7] - Trades at 25.9 times forward earnings, reflecting a premium valuation due to its technological expertise and strong fundamentals [8] - **W.W. Grainger (GWW)**: - Offers 53 consecutive years of dividend growth with a conservative 21.2% payout ratio and a yield of 0.68% [9] - The five-year dividend growth rate is 6.4%, indicating a balanced approach to shareholder returns [9] - Shares trade at 28.8 times forward earnings, justified by its vast distribution network and strong customer relationships [10] Investment Strategy - Identifying companies like Target, Parker-Hannifin, and W.W. Grainger that can sustain and grow dividends through various market conditions is essential for building a solid foundation for retirement income [11] - These companies demonstrate a commitment to shareholders through decades of dividend increases and conservative financial management, making them ideal candidates for a diversified retirement portfolio [11]

Company Overview - W.W. Grainger Inc. is a broad line, business-to-business distributor of maintenance, repair, and operating (MRO) products and services, incorporated in 1928 [13] - The company's operations are primarily in North America, Japan, and the U.K., serving a wide array of industries including government, manufacturing, transportation, commercial, and contractors [13] Investment Insights - W.W. Grainger has a Zacks Rank of 3 (Hold) and a VGM Score of A, indicating a solid position in the market [14] - The company has a Momentum Style Score of B, with shares increasing by 10.1% over the past four weeks [14] - Six analysts have revised their earnings estimates upwards for fiscal 2024, with the Zacks Consensus Estimate increasing by $0.17 to $38.92 per share [14] - W.W. Grainger boasts an average earnings surprise of 1.2%, suggesting potential for positive performance [14] - With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, W.W. Grainger is recommended for investors' consideration [15]