Core Viewpoint - Ashtead Group PLC (ASHTY) is currently viewed as a better value opportunity compared to W.W. Grainger (GWW) based on various valuation metrics and earnings outlook [1]. Valuation Metrics - ASHTY has a Zacks Rank of 1 (Strong Buy), indicating a strong earnings estimate revision trend, while GWW has a Zacks Rank of 4 (Sell) [3]. - ASHTY's forward P/E ratio is 15.42, significantly lower than GWW's forward P/E of 25, suggesting ASHTY is undervalued relative to GWW [5]. - The PEG ratio for ASHTY is 1.44, while GWW's PEG ratio is 2.65, indicating ASHTY has a more favorable valuation when considering expected earnings growth [5]. - ASHTY's P/B ratio is 3.49, compared to GWW's P/B of 13.43, further supporting ASHTY's superior valuation [6]. Overall Value Grade - ASHTY has a Value grade of B, while GWW has a Value grade of C, reflecting ASHTY's stronger earnings outlook and more attractive valuation metrics [6].

Group 1 - The stock of W.W. Grainger, Inc. (GWW) is experiencing significant attention due to high implied volatility in the options market, particularly the Apr 17, 2025 $720.00 Call option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in Grainger's stock price, potentially due to an upcoming event [2] - Grainger currently holds a Zacks Rank of 4 (Sell) in the Industrial Services industry, which is in the bottom 37% of the Zacks Industry Rank, with a decrease in earnings estimates from $10.37 to $9.62 per share over the last 60 days [3] Group 2 - The high implied volatility surrounding Grainger's stock may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay [4]

Sales and Customer Base - Grainger generated approximately 82% of its consolidated net sales from U.S. operations in 2024[40]. - The company serves over 4.5 million customers globally, with no single customer accounting for more than 10% of total sales in 2024[27]. - Approximately 20% of 2024 sales were from private label MRO items bearing Grainger's registered trademarks[37]. - Grainger's High-Touch Solutions N.A. segment primarily serves mid-size and large businesses with complex purchasing needs[28]. - High-Touch Solutions N.A. segment reported net sales of $13,720 million, an increase of $453 million or 3.4% from 2023[160]. - Endless Assortment segment net sales reached $3,134 million, up $218 million or 7.5%, with a 12% increase on a daily constant currency basis[164]. Financial Performance - Net sales for the year ended December 31, 2024, were $17,168 million, an increase of $690 million or 4.2% compared to 2023[153]. - Gross profit for the same period was $6,758 million, up $262 million or 4%, with a gross profit margin of 39.4% remaining flat[154]. - Operating earnings for 2024 were $2,637 million, reflecting an increase of $72 million or 3% from 2023[156]. - Net earnings attributable to W.W. Grainger, Inc. were $1,909 million, up $80 million or 4.4% year-over-year[153]. - Diluted earnings per share increased to $38.71, a rise of 7% compared to $36.23 in 2023[158]. - For the twelve months ended December 31, 2024, net earnings attributable to W.W. Grainger, Inc. were $1,921 million, reflecting a 3.8% increase compared to the previous year[1]. - Diluted earnings per share for the same period increased by 6.2% to $38.96[1]. Operational and Strategic Initiatives - Grainger's KeepStock® program offers comprehensive inventory management solutions, including vendor-managed and customer-managed inventory[35]. - The company is exploring new operating initiatives, including AI applications, to manage costs and improve sales performance[76]. - Grainger's strategic aspiration for 2025 includes expanding its leadership position in the MRO market through enhanced customer service and operational processes[147]. - Grainger's ongoing research and development in AI technologies is essential for maintaining competitive advantage and operational success[101]. Supply Chain and Risk Management - Disruptions in Grainger's supply chain could adversely impact results of operations, including delays and increased costs from natural disasters or geopolitical events[59]. - Grainger sources products from over 5,000 suppliers, with no single supplier accounting for more than 5% of total purchases, which mitigates supply risk[65]. - Fluctuations in commodity prices, such as steel and copper, may adversely affect Grainger's gross margins due to increased costs[69]. - The company continues to monitor commodity price risks and has implemented alternative sourcing plans to mitigate exposure[201]. Compliance and Cybersecurity - Grainger's operations involve the collection and storage of personally identifiable and sensitive information, which poses cybersecurity risks[103]. - Grainger's compliance with a complex array of global laws and regulations is critical to avoid potential fines and reputational damage[112]. - Cybersecurity incidents could materially affect Grainger's business strategy and financial results, including potential litigation and remediation costs[106]. - Grainger's cybersecurity team is led by a CISO with over 20 years of experience, focusing on risk management and mitigation strategies[127]. Market Conditions and Competition - Economic downturns and market trends affecting customers' profitability could lead to reduced demand for Grainger's products, impacting sales growth[62]. - Grainger faces competition from various large and small competitors, necessitating continuous adaptation to market pressures[74]. - Changes in U.S. trade policy and retaliatory actions could worsen economic conditions, impacting demand for Grainger's products[70]. Capital and Debt Management - Grainger's consolidated indebtedness as of December 31, 2024, was approximately $2.8 billion[120]. - Grainger's ability to raise capital may be impacted by changes in credit ratings, which could increase borrowing costs[119]. - Grainger's debt agreements contain covenants that, if not complied with, could result in defaults and accelerate indebtedness[121]. - Total debt as a percentage of total capitalization increased to 42.9% as of December 31, 2024, from 40.1% in 2023[9]. Workforce and Culture - The company has more than 26,000 team members worldwide, with approximately 85% located in North America[43]. - The company emphasizes a purpose-driven culture, with approximately 42% of team members being women and 39% of U.S. team members being racially and ethnically diverse[49]. - Grainger must effectively attract and retain key team members to maintain operational success, facing challenges from competitive labor markets[89]. Stock Performance and Shareholder Returns - Grainger's common stock is traded on the New York Stock Exchange under the symbol GWW, with 496 shareholders of record as of February 14, 2025[137][139]. - During the three months ended December 31, 2024, Grainger repurchased a total of 401,325 shares of common stock[140]. - The average price paid per share for repurchases in December 2024 was $1,132.63[140]. - Grainger repurchased shares worth $1,201 million in 2024, an increase from $850 million in 2023, with plans for 2025 repurchases expected to be between $1,150 million and $1,250 million[7].

Core Points - Grainger's Board of Directors has nominated 12 candidates for the 2025-2026 period, all of whom are current Board members [1] - Stuart L. Levenick, a Board member since 2005, will not stand for re-election after 19 years of service [1] - D.G. Macpherson, Grainger's Chairman and CEO, expressed gratitude for Levenick's leadership and contributions to the company [2] Company Overview - Grainger is a leading broad line distributor with operations primarily in North America, Japan, and the United Kingdom [2] - The company serves over 4.5 million customers worldwide, generating $17.2 billion in revenue for 2024 [2] - Grainger operates through two business models: High-Touch Solutions, offering approximately 2 million MRO products, and Endless Assortment, providing access to over 14 million products through Zoro.com and more than 24 million products through MonotaRO.com [2]

Core Viewpoint - Ashtead Group PLC (ASHTY) is currently viewed as a better value opportunity compared to W.W. Grainger (GWW) based on various financial metrics and analyst outlooks [1]. Valuation Metrics - ASHTY has a Zacks Rank of 1 (Strong Buy), indicating a more favorable earnings estimate revision trend compared to GWW, which has a Zacks Rank of 4 (Sell) [3]. - ASHTY's forward P/E ratio is 16.45, significantly lower than GWW's forward P/E of 25.06, suggesting ASHTY is undervalued relative to GWW [5]. - The PEG ratio for ASHTY is 1.54, while GWW's PEG ratio is 2.66, indicating ASHTY has a better balance between its price and expected earnings growth [5]. - ASHTY's P/B ratio stands at 3.72, compared to GWW's P/B of 13.52, further supporting the notion that ASHTY is undervalued [6]. - Based on these valuation metrics, ASHTY holds a Value grade of B, while GWW has a Value grade of C [6]. Earnings Outlook - ASHTY is recognized for its solid earnings outlook, which contributes to its position as the superior value option compared to GWW [7].

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]