W.W. Grainger Inc. Stock Buy Recommendation Reiterated (GWW)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- W.W. Grainger (NYSE:GWW) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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Highlights from the ratings report include:

• GWW's revenue growth has slightly outpaced the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 7.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
• GWW's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.29, which illustrates the ability to avoid short-term cash problems.
• GRAINGER (W W) INC has improved earnings per share by 6.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GRAINGER (W W) INC increased its bottom line by earning $9.52 versus $9.07 in the prior year. This year, the market expects an improvement in earnings ($11.69 versus $9.52).
• The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Trading Companies & Distributors industry average. The net income increased by 5.2% when compared to the same quarter one year prior, going from $148.48 million to $156.27 million.
• The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

W.W. Grainger, Inc. engages in the distribution of maintenance, repair, and operating supplies, as well as other related products and services for businesses and institutions primarily in the United States and Canada. W.W. Grainger has a market cap of $15 billion and is part of the services sector and wholesale industry. The company has a P/E ratio of 20.7, above the S&P 500 P/E ratio of 17.7. Shares are up 6.7% year to date as of the close of trading on Friday.

You can view the full W.W. Grainger Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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• W.W. Grainger Inc. Stock Price

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• W.W. Grainger Inc. Growth Rates

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• W.W. Grainger Inc. Income Statement