W.W. Grainger, Inc. (GWW)
Valuation Overview•Is W.W. Grainger, Inc. Overvalued or Undervalued?
Priced at a premium to peer multiples and intrinsic cash flows, demanding strong execution to justify current levels.
Moderate quality score of 69/100, reflecting stable operating margins and manageable leverage.
Analysts remain cautious, with consensus price targets indicating limited room for upside expansion.
Verdict: Solid fundamental quality, though growth presents a headwind.
Wall Street is cautious, forecasting potential downside alongside robust expected earnings growth. This is paired with healthy capital returns, driven predominantly by aggressive share repurchases.
GWW demonstrates strong business quality with robust profitability and healthy margins (highlighted by a massive 32.1% ROIC). This is supported by a highly conservative balance sheet featuring strong liquidity and pristine Altman Z safety.
The company demonstrates solid revenue growth (5.6% 3Y CAGR) paired with stable bottom-line earnings. Operating efficiency remains adequate with margins around 14.2%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $4.7B | +4.5% | +5.6% | +8.7% | +6.0% | |
| EBITDA | $855.0M | — | +6.8% | — | — | |
| Net Income | $555.0M | -10.6% | +3.3% | — | +8.3% | |
| EPS (Diluted) | $11.65 | -8.6% | +5.4% | +22.3% | +11.8% | |
| Free Cash Flow | $569.0M | -15.2% | +7.3% | +7.5% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 39.2% | 39.1% | 38.4% | 38.5% |
| Operating Margin | 14.2% | 15.3% | 14.5% | 12.3% |
| Net Margin | 9.7% | 10.6% | 10.0% | 8.2% |
| FCF Margin | 7.5% | 8.7% | 7.7% | 7.6% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $10.21 | $11.65 | +14.1% | ||
| Q1'26 | $9.46 | $9.44 | -0.2% | ||
| Q4'25 | $9.98 | $10.21 | +2.3% | ||
| Q3'25 | $10.07 | $9.97 | -1.0% | ||
| Q2'25 | $9.48 | $9.86 | +4.0% | ||
| Q1'25 | $9.74 | $9.71 | -0.3% | ||
| Q4'24 | $9.97 | $9.87 | -1.0% | ||
| Q3'24 | $9.58 | $9.76 | +1.9% |
Total return is +31.8% (1Y), outperforming the benchmark by +6.9%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +36.5% | +27.2% | — |
| 1Y | +31.8% | +6.9% | +0.9% |
| 3YCAGR | +23.9% | +2.8% | +3.5% |
| 5YCAGR | +26.3% | +12.6% | +8.9% |
| 10YCAGR | +20.4% | +6.4% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about W.W. Grainger, Inc. (GWW) valuation, health, and returns.
W.W. Grainger, Inc. is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Premium mostly justified compared to industry peers. overvalued (implying -35.8% downside from DCF intrinsic value of $876.33)
W.W. Grainger, Inc. has multiple valuation anchors: DCF Intrinsic Value: $876.33 | Peer Relative Fair Value: $1252.41 | Wall Street Analyst Target: $1275.38 (implying -6.6% upside). A convergence of these signals offers higher conviction.
W.W. Grainger, Inc. displays good financial health with a composite quality score of 69/100, supported by a Altman Z-Score of 11.2 (safe zone), Piotroski F-Score of 8/9, Return on Invested Capital (ROIC) of 32.1%.
W.W. Grainger, Inc. pays a 0.7% dividend yield, covered by a 27% payout ratio with 41 years of growth, supplemented by a 1.6% buyback yield.
W.W. Grainger, Inc.'s current growth trajectory is Stable. The company achieved +4.5% 1Y revenue growth and -8.6% 1Y EPS growth, compared to its 3Y revenue CAGR of +5.6%.
Wall Street consensus is Hold based on 38 analysts, beating EPS expectations in 58% of recent quarters with a 1-quarter streak. The consensus price target represents a -6.6% change from current levels.
Investment risks for W.W. Grainger, Inc. include: -13.3% 1-year max drawdown. Volatility risk is characterized by a beta of 0.76x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.