W.W. Grainger Earnings: Five Quarters in a Row of Expanding Margins, Net Income Drops

S&P 500 (NYSE:SPY) component W.W. Grainger Inc. (NYSE:GWW) reported its results for the third quarter. W.W. Grainger is a distributor of facilities maintenance products and provides services and related information used by businesses and institutions throughout North America.

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W.W. Grainger Inc. Earnings Cheat Sheet

Results: Net income for the industrial services fell to $155.4 million ($2.15 per share) vs. $182.1 million ($2.51 per share) a year earlier. This is a decline of 14.7% from the year-earlier quarter.

Revenue: Rose 7.9% to $2.28 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: W.W. Grainger Inc. fell short of the mean analyst estimate of $2.95 per share. Analysts were expecting revenue of $2.27 billion.

Quoting Management: “We delivered a solid quarter, with stronger organic sales growth in September than in August and continued to gain market share, expand margins and generate nearly $100 million in operating cash flow over the prior year. We are also resolving an ongoing dispute with the GSA and USPS and are pleased to be near final settlement with the DOJ. We value our long-standing relationship with these important federal government customers and look forward to continuing to expand the products and services we provide to them in the future,” said Chairman, President and Chief Executive Officer Jim Ryan.

Key Stats:

Last quarter’s profit decreases breaks a four-quarter run of profit increases. In the second quarter, net income rose 12.3% from the year earlier, while the figure increased 18.7% in the first quarter, 12.3% in the fourth quarter of the last fiscal year and 21.1% in the third quarter of the last fiscal year.

Revenue has risen for the last four quarters. Revenue increased 12.3% to $2.25 billion in the second quarter. The figure rose 16.4% in the first quarter from the year earlier and climbed 13.7% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company fell short of estimates last quarter after being in line with expectations the quarter before with net income of $2.63.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from $2.54 a share to $2.51 over the last sixty days. Over the past sixty days, the average estimate for the fiscal year has reached $10.64 per share, a decline from $10.72.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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