Bernstein initiates coverage on WW Grainger stock with Market Perform rating

Investing.com - Bernstein initiated coverage on WW Grainger (NYSE:GWW) with a Market Perform rating and a price target of $975.00 on Wednesday. The industrial distributor, currently trading at $945.61, is down over 21% in the past year and is trading near its 52-week low of $893.99.

The research firm highlighted Grainger’s position as the largest player in the industrial distribution sector with 9% market share, noting the company’s advantages in sourcing products at low costs, offering greater product breadth, and providing next-day distribution with best-in-class technology. With a market cap of nearly $45 billion and annual revenue of $17.75 billion, InvestingPro identifies Grainger as a "prominent player in the Trading Companies & Distributors industry" with strong financial health.

Bernstein analyst Connor Cerniglia identified Grainger as a beneficiary of the ongoing industry consolidation trend, pointing out that the top 10 players gained approximately 12% market share between 2018 and 2023.

The firm sees a long runway for growth for Grainger amid this consolidation trend, which is expected to continue in the industrial distribution sector.

On margins, Bernstein expressed more caution than the broader market consensus, noting that after a decade of sustained gross margin compression for both Fastenal and Grainger, consensus expectations call for Grainger’s gross margins to remain roughly flat over the next four years with a positive inflection in EBIT margins. Despite these concerns, InvestingPro data shows Grainger maintains a gross profit margin of 39.09% and trades at a P/E ratio of 26.44. The company has also raised its dividend for 33 consecutive years, demonstrating long-term financial stability. For a comprehensive analysis including 12 more ProTips and detailed valuation metrics, check out Grainger’s Pro Research Report, available to subscribers.

In other recent news, W.W. Grainger Inc. reported its fiscal third-quarter earnings for 2025, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $10.21, exceeding the forecasted $9.95. Additionally, W.W. Grainger’s revenue outperformed projections, reaching $4.7 billion compared to the anticipated $4.64 billion. These results highlight the company’s strong financial performance in the recent quarter. Despite the positive earnings and revenue figures, investor sentiment appeared cautious. Analysts had projected lower earnings and revenue, but W.W. Grainger’s actual results demonstrated robust performance. These developments indicate that the company has been able to exceed market expectations in recent times.

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