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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
W.W. Grainger, Inc. (XNYS:GWW) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
GWW
Name:
W.W. GRAINGER, INC. (XNYS:GWW)
Sector:
286.00M
Industry:
Industrial Distribution
CEO:
Mr. Donald Macpherson
Total Employees:
22,700
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -174.76% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF W.W. GRAINGER, INC.(GWW) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND INDUSTRIAL DISTRIBUTION INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
555.31
One Month Price Target:
$559.05
Six Month Price Target :
$577.73
Likely Price in One Year's Time:
Ticker:
$600.15
Likely Trading Range Today Under (Normal Volatility)
$553.92
Price Upper limit ($) :
$557.77
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$532.55
This week:
$504.41
This month :
$453.51
Other Primary facts
Market Cap:
28.56B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
50.87M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
13.94%
-13.72%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$660.81
$611.64
$449.81
$498.98
Medium risk (<10%) entry points
Buy Call
Sell Call
$595.63
Buy Put:
Sell Put:
$585.13
$514.86
$525.49
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
GWW
Sharpe Ratio:
4.31%
Comparison:
GWW, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 39.89% higher than the industry
& ratio is 89.08% higher than the market/S&P 500 average
Average Returns/Yield of
GWW
Daily returns:
0.10%
Weekly returns:
0.48%
Monthly returns:
1.94%
Yearly returns:
22.00%
Comparison of returns:
Average annual returns/yield (last 3 years) is 5.72% above industry average
Classification:
GWW, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.86
Statistical test of Returns:
GWW has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.04%
Weekly Volatility:
4.57%
Monthly Volatility:
9.14%
Yearly Volatility:
31.65%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.83%
Volatility in last five trading days has been -59.32% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.10%
Weekly VaR:
-9.17%
Monthly VaR:
-18.33%
How Much Can the price of
GWW
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-15%
Worst case (decline):
-63.50%
This translates to price declining to:
$471.48
This translates to price declining to:
$202.68
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
GWW is a 29.38% riskier investment compared to the market/S&P 500 & is 10.84% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -24.99% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
GWW
Beta in relation to market/S&P 500--1.20
Expected beta in 1 year's time:
0.759
Expected beta in 3 year's time:
1.073
Unlevered (debt free) Beta:
0.616
Beta in relation to Nasdaq (XNAS):
0.68
Beta in relation to all global stocks::
0.731
Beta Comparison & Analysis
Beta of competitors/peers::
1.008
Beta is 19.20% higher than peers
Average Industry Beta:
1.265
Beta is -5.02% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
52.65%
Sustainable growth rate is 212.46% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.119
Alpha is 16.62% above industry average alpha yield
Alpha is 756% higher than market/& is unsustainably high
Analysis of Cost of Capital of
GWW
Equity cost of capital:
0.114
Equity cost of capital is -3.68% below industry mean WACC
Unlevered (without debt) cost of capital:
5.83%
Before-tax cost of debt:
3.29%
After-tax cost of debt:
2.60%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.60%
WACC is -9.25% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$267.05
Revenue growth rate per share of (3Y):
11.92
Annual revenue growth rate is 76.38% above the industry average
EPS:
$22.59
Expected Annual growth rate of EPS (3Y):
9.09%
Expected future EPS growth rate is -59.43% lower than the Industrial Distribution industry
Free cash flow (FCF) per share:
$14.32
Balance sheet equity growth per share: 22.21%
Equity growth rate per share is 3.18% higher than the industry
Debt per share
$51.92
EBITDA per share
$36.74
Valuation Analysis Today of
GWW
P/E Ratio:
21.74
P/E Ratio of Competitors/Peers:
21.68
P/E ratio is 0.28% higher than main peers & is -15.81% lower than the industry
Stock price/value with industry average P/E ratio: $583.45
GWW is -4.82% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $81.01
Present value of the expected future dividends only: $70.15
P/S (Price to Sales ratio):
2.08
Price to sales ratio is 15.14% above the industry mean
P/B (Price to book value ratio):
11.92
Price to free cash flow: 38.79
Price to free cash flow ratio is -16.54% lower than the industry
Net income growth rate (3Y):
44.28%
Net income growth rate is -314.43% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 7.17%
Dividend yeild: 1.18%
Previous Dividend: $1.72
Previous adjusted dividend: $1.72
Previous Dividend: $6.58
Expected next dividend best case: $1.80
Expected next dividend worst case: $1.64
Average dividend payment (long-term): $1.56
Average dividend increase/decrease (growth rate) % per period: 1.83%
Expected next dividend payment date: 30/08/2022
Expected next dividend record date: 08/08/2022
Expected next dividend declaration date: 26/07/2022
Previous dividend payment date: 06/01/2022
Previous dividend record date: 05/09/2022
Previous dividend declaration date: 27/04/2022
Dividend History:
2022-05-06--$1.72
2021-11-05--$1.62
2021-05-07--$1.62
2022-02-11--$1.62
2021-08-06--$1.62
2021-02-05--$1.53
Dividend growth rate is -114.18% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
126.91%
Net debt to equity ratio:
112.64%
Debt to assets ratio:
37.77%
Net debt to assets ratio:
33.52%
Debt-to-asset ratio is -12.79% below industry average
Ability to repay debt:
Interest coverage ratio:
21
Interest coverage ratio is -79.80% less than industry average
Looking forward:
Debt growth rate:
15.23%
Annual debt growth is -27% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.727
Statistical significance of correlation:
GWW has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.554
Stock price is 31.16% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.554
Correlation of price movement with Nasdaq (^IXIC):
0.026
Covariance of price movement with the market:
0.031
Kurtosis
9.224
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.114
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
GWW
Gross Profit Margin Ratio:
147%
Operating Profit Margin Ratio:
12.68%
Operating profit margin is 97.28% higher than the industry
Net Profit Margin Ratio:
147%
Effective Tax Rate:
25.02%
Effective tax rate is 25.46% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
56.27%
Return on equity (ROE) is 117.67% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
16.75%
Return on assets (ROA) is 69.11% higher than the industry
Financial Leverage:
1.6x
Current Ratio:
2.55
Current ratio is 2.26% above industry average
Cash Conversion Cycle (days):
33.6
Cash conversion cycle is 5.42% above industry average
The remaining useful life of property plant & equipment is: 0.0 years
Stock based compensation to net income ratio:
0.77%
In-depth Efficiency Analysis
Revenue generated per employee:
598.5K
Each employee generates 6% more revenue than industry average revenue per employee
EBITDA generated per employee:
82.3K
Each employee generates 30% more EBITDA than industry average revenue per employee
Profit generated per employee:
51.6K
Each employee generates 31% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
12.6K
Each employee generates -10247% less free cash flow than industry average revenue per employee
Assets/Capital per employee
112.5K
Each employee generates -10247% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
GWW
DOVER CORPORATION (XNYS:DOV)
DELTA AIR LINES, INC. (XNYS:DAL)
KANSAS CITY SOUTHERN (XMEX:KSU*)
INGERSOLL RAND INC. (XNYS:IR)
UNITED RENTALS, INC. (XNYS:URI)
ZTO EXPRESS (CAYMAN) INC. (XNYS:ZTO)
CNH Industrial NV (XNYS:CNHI)
TRUSCREEN GROUP LIMITED (XASX:TRU)
SWK HOLDINGS CORPORATION (XNAS:SWKH)
Current Analyst Ratings
Strong buy�4%
Buy�4%
Hold�67%
Sell�25%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
13.59B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
8.58B
5.01B
-
-
3.29B
-
-
3.29B
-
89.00M
194.00M
1.87B
1.72B
1.17B
1.66B
415.00M
1.17B
Statement of Cash Flow
Date:
Period:
52.00M
Differed Income Tax :
7.00M
Stock Based Compensation :
9.00M
Change in Working Capital :
- 114000.00K
Accounts Receivables:
- 263000.00K
Other Working Capital:
86.00M
Other Non-Cash Items:
4.00M
Net Cash Provided by Operating Activities:
343.00M
Investments in PP&E:
- 57000.00K
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
364.00M
-
364.00M
2.00B
1.93B
145.00M
4.44B
1.80B
384.00M
229.00M
-
-
146.00M
2.55B
-
6.99B
1.04B
67.00M
91.00M
-
637.00M
1.74B
2.64B
114.00M
2.88B
-
4.62B
55.00M
9.78B
- 109000.0K
- 7647000.00K
March 31, 2022 at 6:00:00 AM
11.86B
2.08B
6.70B
-
2.71B
2.3B
-
-
- 57000.00K
-
-
- 79000.00K
- 84000.00K
4.00M
- 159000.00K
- 4000.00K
123.00M
364.00M
241.00M
343.00M
- 57000.00K
286.00M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
GWW
2023
2024
2025
2026
2027
$642.66
$694.55
$750.63
$811.25
$876.75