Sustainable Growth Advisers (SGA), an investment management company, released its third-quarter investor letter for its “U.S. Large Cap Growth Strategy.” A copy of the letter can be downloaded here. The portfolio returned -1.3% (Gross) and -1.4% (Net) in the third quarter, compared to a 10.5% return for the Russell 1000 Growth Index and an 8.1% return for the S&P 500 Index. SGA’s investment objective is to invest in high-quality growth businesses expected to achieve consistent mid-teens earnings growth, acc ...

W.W. Grainger, Inc. (GWW), headquartered in Lake Forest, Illinois, distributes maintenance, repair, and operating products and services. Valued at $48 billion by market cap, the company's products include motors, HVAC equipment, lighting, hand and power tools, pumps, packaging, material handling, adhesives, safety, janitorial, electrical, and metalworking equipment. The MRO giant is expected to announce its fiscal fourth-quarter earnings for 2025 before the market opens on Tuesday, Feb. 3. Ahead of the e ...

Core Insights - Parnassus Investments reported that the S&P 500 Index increased by 8.12% in Q3 2025, driven by investor optimism regarding monetary easing, strong consumer demand, and solid corporate earnings [1] - The Parnassus Core Equity Fund (Investor Shares) returned 2.57% in Q3 2025, underperforming the S&P 500 Index, with a year-to-date return of 9.89% compared to the index's 14.83% [1] Company Highlights - W.W. Grainger, Inc. (NYSE:GWW) is highlighted as a key holding in the Parnassus Core Equity Fund, with a one-month return of 9.89% and a 52-week loss of 5.14% [2] - As of December 22, 2025, W.W. Grainger, Inc. shares closed at $1,034.87, with a market capitalization of $49.21 billion [2] - The company reported Q3 2025 sales of $4.7 billion, reflecting a 6.1% increase on a reported basis and a 5.4% increase on a daily constant currency basis [4] Investment Strategy - The Parnassus Core Equity Fund has reallocated assets by trimming IT holdings in Advanced Micro Devices and Broadcom, and investing in W.W. Grainger, Inc. due to its economies of scale, network effects, and strong customer loyalty [3] - The management team of W.W. Grainger, Inc. is noted for its proven track record of outperforming industry peers, positioning the company to benefit from trends such as digitization and nearshoring [3]

Sands Capital, an investment management company, released its “Sands Capital Select Growth Strategy” Q3 2025 investor letter. A copy of the letter can be downloaded here. U.S. large-cap growth equities continued to recover from a sharp sell-off in early April. Strong corporate earnings, investor enthusiasm around artificial intelligence (AI), and growing expectations for Federal Reserve policy easing drove the robust gains. The portfolio returned 6.3% in the quarter, outperforming the benchmark Russell 1000 ...

Core Insights - W.W. Grainger, Inc. (GWW) is a major distributor of maintenance, repair, and operating products, with a market cap of $45.3 billion [1] - The company has faced significant stock underperformance, declining 22.9% over the past year compared to an 11% increase in the S&P 500 Index [2] - GWW's stock has also underperformed relative to the Industrial Select Sector SPDR Fund (XLI), which gained 5.2% over the same period [3] Financial Performance - GWW reported Q3 results with an adjusted EPS of $10.21, exceeding Wall Street's expectation of $9.93, and revenue of $4.7 billion, surpassing the forecast of $4.6 billion [5] - For the full fiscal year, GWW expects adjusted EPS between $39 and $39.75, and revenue between $17.8 billion and $18 billion [5] - Analysts project a 1.3% growth in EPS to $39.46 for the current fiscal year, with a mixed earnings surprise history [6] Analyst Sentiment - Among 19 analysts covering GWW, the consensus rating is a "Hold," with three "Strong Buy," 13 "Holds," one "Moderate Sell," and two "Strong Sells" [6] - The current analyst sentiment is more bearish than two months ago, with one analyst suggesting a "Strong Sell" [7] Strategic Initiatives - GWW is facing challenges from inflation and tariffs, which have impacted margins, but has implemented productivity initiatives and price hikes to mitigate costs [4] - The company is streamlining its portfolio by exiting the UK business and investing in digital transformation to enhance growth and profitability [4]

Core Insights - ZKH Group Limited reported a resilient financial performance in Q3 2025, with net revenues increasing by 2.1% year-over-year to RMB2,328.4 million (US$327.1 million) [6][12] - The company experienced a significant increase in its customer base, growing by 48% to 70,800 customers, indicating deeper market penetration [2][8] - The company is focusing on enhancing its AI capabilities and expanding its international business, which is expected to drive future growth [8][21] Financial Performance - Gross merchandise volume (GMV) decreased by 2.3% year-over-year to RMB2,622.9 million, with the ZKH platform GMV declining by 2.8% [2][6] - Net loss narrowed significantly to RMB24.3 million (US$3.4 million) from RMB81.8 million in the same period of 2024, reflecting improved operational efficiency [12][14] - Non-GAAP adjusted net loss also improved to RMB14.1 million (US$2.0 million) from RMB66.2 million year-over-year [12][15] Operational Highlights - The company added over 2.3 million sellable SKUs, bringing the total to over 19 million, with a notable 16.7% year-over-year growth in higher-margin private-label product GMV [8][11] - Fulfillment expenses decreased by 9.8% year-over-year, contributing to improved operating margins [14][17] - The company consolidated its warehousing operations, which is expected to yield annualized savings in rent, inventory, and freight [8][14] Strategic Initiatives - ZKH is embedding AI across various operations, which has already generated over RMB100 million in incremental revenue through enhanced product recommendations [8][11] - The company is expanding its U.S. distribution channels, including partnerships with platforms like Amazon, to enhance its market presence [8][21] - The management is committed to advancing AI development and scaling overseas operations to compound long-term shareholder value [8][21]

Core Insights - TAT Technologies Ltd. is a key player in the aerospace and ground defense sectors, focusing on Maintenance, Repair, and Overhaul (MRO) services, and has established itself in underserved market segments [1][6] - The company reported continued organic growth in Q3 2025, with a rebound in Auxiliary Power Unit (APU) activity and contributions from landing gear maintenance [3][6] - Benchmark initiated coverage on TAT Technologies with a "Buy" rating on November 17, 2025, indicating a positive outlook for the company's future [2][6] Financial Performance - The stock price of TAT Technologies is currently $40.04, reflecting a 0.65% increase, with a market capitalization of approximately $518.5 million [4] - Over the past year, the stock has fluctuated between a low of $20 and a high of $45.83, demonstrating resilience and potential for future growth [4] Strategic Positioning - The company's diversified business model has strategically positioned it as a reliable partner in the MRO industry, adapting to changing market conditions [3][5] - TAT Technologies' focus on underserved market segments enhances its appeal as a compelling investment opportunity, as noted by Benchmark's recent rating [5]

Core Insights - WD-40 Company is a global consumer products company known for its multi-use product, WD-40, serving both consumer and industrial markets in the maintenance, repair, and overhaul (MRO) segment [1] - The company exhibits a Return on Invested Capital (ROIC) of 24.83%, significantly surpassing its Weighted Average Cost of Capital (WACC) of 4.46%, resulting in a ROIC to WACC ratio of 5.57, indicating efficient capital utilization and robust profitability [2][6] - Competitors such as J&J Snack Foods Corp. and Quaker Chemical Corporation show lower ROIC to WACC ratios, highlighting challenges in generating returns above their cost of capital [3][6] Company Performance - WD-40's ROIC of 24.83% is notably higher than J&J Snack Foods Corp.'s ROIC of 6.68% and Quaker Chemical Corporation's negative ROIC of -2.87%, demonstrating superior capital efficiency [2][3] - Lancaster Colony Corporation and Balchem Corporation have ROIC to WACC ratios of 2.55 and 1.26, respectively, while Innospec Inc. has a ratio of 2.99, all of which are lower than WD-40's impressive 5.57 ratio [4] - Overall, WD-40's ability to generate high returns on invested capital compared to its cost of capital underscores its strong performance in the industry, positioning it as a leader among its peers [5]

Financial Data and Key Metrics Changes - Total company reported sales for Q3 2025 were nearly $4.7 billion, up 6.1% on a reported basis or 5.4% on a daily constant currency basis [6][11] - Gross margins for the company were 38.6%, operating margins were 15.2%, and diluted EPS finished the quarter at $10.21, up $0.34 or 3.4% year-over-year [7][11] - Operating cash flow was $597 million, allowing the company to return $399 million to shareholders through dividends and share repurchases [7][8] Business Line Data and Key Metrics Changes - The high-touch solution segment saw sales increase by 3.4% on both a reported and daily constant currency basis, driven by volume growth and price inflation [11][12] - The endless assortment segment experienced an 18.2% increase in sales on a reported basis or 14.6% on a daily constant currency basis, with Zoro U.S. up 17.8% and MonotaRO achieving 12.6% growth [14][15] Market Data and Key Metrics Changes - The MRO market remained muted due to a heightened inflationary environment, impacting demand [12] - Strong performance was noted with contractor and healthcare customers, while manufacturing customers showed improving results [12] Company Strategy and Development Direction - The company announced plans to sell its UK-based Cromwell business and exit the UK market, focusing on growth in North America and Japan [9][20] - The strategy includes leveraging technology and AI to enhance customer solutions and operational productivity [5][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing to serve customers well and deliver solid results despite external uncertainties [10][24] - The company anticipates gross margins will stabilize around 39% as LIFO impacts subside and price costs normalize [18][20] Other Important Information - The company is experiencing tariff-related LIFO inventory valuation headwinds, but these are expected to dissipate as inflation cools [8][18] - The company is actively engaged in pricing actions to offset cost pressures, with expectations for further inflationary pressures into 2026 [17][20] Q&A Session Summary Question: Impact of Cromwell on 2025 guidance - The Cromwell impact was adjusted for, with an estimated $40 million in revenues for Q4 from Cromwell and Zoro UK [26] Question: Pricing actions in Q4 - Pricing actions taken in Q4 were normal price cycle increases, with additional adjustments planned for November [27] Question: LIFO headwind implications - The LIFO headwind was noted to be at least 70 basis points, with expectations for gross margins to improve as LIFO impacts diminish [28] Question: Q4 growth expectations - Q4 guidance reflects challenges from the government shutdown and prior year hurricane impacts, with expectations for a step down in growth [31][32] Question: Government shutdown impact - The government shutdown is expected to impact total business by approximately one point for each day it continues [35][36] Question: Future pricing strategies - The company is taking a measured approach to pricing, ensuring competitiveness while managing cost increases [39][40] Question: UK exit lessons - The exit from the UK market is seen as a strategic decision to focus on more impactful growth opportunities in North America and Japan [49][50]

Core Viewpoint - Grainger reported solid third-quarter results for 2025, with sales increasing by 6.1% year-over-year, and adjusted diluted EPS rising by 3.4%. The company is focused on navigating uncertainties through strong execution and innovative capabilities while updating its full-year earnings outlook. Financial Performance - Sales for Q3 2025 reached $4.7 billion, a 6.1% increase from Q3 2024, or 5.4% on a daily, constant currency basis [1][3] - Gross profit was $1.798 billion, up 4.5% compared to the previous year [2] - Operating earnings reported at $511 million, down 25.5% year-over-year, with an adjusted operating earnings of $707 million, up 3.1% [6][2] - Net earnings attributable to Grainger were $294 million, a decrease of 39.5% from the prior year [2][30] - Diluted EPS was $6.12 on a reported basis, down 38.0%, while adjusted diluted EPS was $10.21, up 3.4% [7][30] Segment Performance - High-Touch Solutions - N.A. segment sales increased by 3.4% on both a daily and constant currency basis [4] - Endless Assortment segment saw sales growth of 18.2%, or 14.6% on a daily, constant currency basis, driven by strong performance at MonotaRO and Zoro [4] Profitability Metrics - Gross profit margin for Q3 2025 was 38.6%, a decrease of 60 basis points from Q3 2024 [5] - Operating margin reported at 11.0%, down 460 basis points, while adjusted operating margin was 15.2%, down 40 basis points [6] Tax and Cash Flow - Effective tax rate for Q3 2025 was 34.7%, up from 24.8% in Q3 2024, primarily due to losses from the planned divestiture of the Cromwell business [8] - Generated $597 million in cash flow from operating activities, with free cash flow of $339 million after $258 million in capital expenditures [9][28] Guidance Update - The company updated its full-year 2025 guidance, narrowing the adjusted diluted EPS range to $39.00 to $39.75, and adjusting net sales expectations to $17.8 - $18.0 billion [11][12]