Industrial supply and equipment distributor W.W. Grainger (GWW) seems to be little affected by what many perceive as a general economic slowdown. Through the first half of 2011, the company has reported record net income results and double digit growth in revenues.
Grainger is a distributor of business supplies and equipment. The company's products are sold via catalogs distributed to local businesses and orders are delivered from local warehouses. Business is also generated through online sales and an outside sales force.
Anyone who has spent time flipping through a Grainger catalog knows the tremendous range of products the company offers its commercial customers. Grainger generates just over 80 percent of sales in the United States. The company's Canada arm chips in 13 percent of sales and the balance comes from operations in Asia and Latin America.
W.W. Grainger earnings press releases for the first two quarters of 2011 both touted record earnings. The company has been on a path of growing earnings and handily beating the Wall Street consensus estimate.
Sales have been increasing by about 10 percent year over year, but earnings are expanding at a much faster pace. In the first quarter, net income per share grew by 66 percent. For the second quarter, the net per share increased by 35 percent from a year earlier. The press release noted that of the 12 percent increase in sales for the second quarter, 10 percent came from volume growth and just 2 percent was due to higher prices.
Management guidance from Grainger currently predicts full year earnings per share in a range of $8.40 to $8.70, up from $6.81 in 2010. The Wall Street consensus estimate is just above the high end of management guidance at $8.73.
Analysts at Bank of America recently upgraded GWW to a buy. However, the analysts at Oppenheimer downgraded GWW to market perform from outperform. The company reports next on Oct. 18.
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