W.W. Grainger, Inc. (GWW) stock analysis

P/E above its 5-year median

W.W. Grainger's P/E of 33.0 is above its own 5-year median of 25.9.

P/E above the industry

W.W. Grainger's P/E of 33.0 is above the Wholesale Trade-durable Goods median of 20.2.

EV/EBITDA above its 5-year median

W.W. Grainger's EV/EBITDA of 21.6 is above its 5-year median of 17.1.

P/B above the industry

W.W. Grainger's price-to-book of 16.30 is above the Wholesale Trade-durable Goods median of 2.14.

Trading above fair value

The share price of $1502.61 is above our fair value estimate of $938.70.

Margin of safety under 20%

The price is 60.1% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 5.6% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 5.6% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 25.0% over the last twelve months, against a 5-year average of 19.7% a year.

Growing faster than the industry

Revenue grew 9.1% over the last twelve months; the Wholesale Trade-durable Goods median is 8.4%.

Guidance raised

W.W. Grainger raised its 2026 Effective Tax Rate outlook on Aug 4, 2026.

Gross margin improving

Gross margin was 39.4% over the last twelve months, against 39.1% a year earlier.

Return on equity over 15%

Return on equity was 54.7% over the last twelve months and averaged 60.2% over five years.

Return on capital over 10%

Return on invested capital was 39.0%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

W.W. Grainger's return on equity of 54.7% is above the Wholesale Trade-durable Goods median of 7.6%.

Earnings grew over 5 years

Net income grew 19.7% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 11.2% over the last twelve months, against a 5-year average of 10.0%.

Net margin above the industry

W.W. Grainger's net margin of 11.2% is above the Wholesale Trade-durable Goods median of 1.9%.

High debt

Debt is 67.0% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 131% five years ago to 67.0%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 76.9% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 2.61 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 13.50; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

W.W. Grainger paid dividends worth 0.5% of the share price over the last twelve months.

Yield below Treasuries

The 0.5% yield is below the 4.6% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.9% or more; W.W. Grainger yields 0.5%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 23.4% of net income.

Covered by free cash flow

Dividends take 29.5% of free cash flow.