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Grainger (GWW) to Post Q1 Earnings: What's in the Offing?

W.W. Grainger, Inc. GWW is scheduled to report first-quarter 2021 results on Apr 30, before the opening bell.

Q1 Estimates

The Zacks Consensus Estimate for first-quarter revenues is pegged at $3.05 billion, indicating growth of 1.8% from the year-ago quarter. The consensus mark for earnings per share stands at $4.29, suggesting an improvement of 1.2% from the prior-year reported figure. The estimate for earnings has gone down 1% over the past 30 days.

Q4 Results

In the last reported quarter, Grainger’s earnings declined on a year-over-year basis despite higher revenues, primarily on lower operating earnings. While revenues beat the Zacks Consensus Estimate, earnings missed the same.

Notably, the company has surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missed the same twice. It has a trailing four-quarter earnings surprise of 2.4%, on average.

W.W. Grainger, Inc. Price and EPS Surprise

W.W. Grainger, Inc. price-eps-surprise | W.W. Grainger, Inc. Quote

Factors to Note

Grainger has been experiencing a surge in sales of personal protective equipment (PPE) and safety products courtesy of higher customer demand in response to the coronavirus pandemic. The incremental demand is primarily stemming from customers in the front-lines of the pandemic, including hospitals, healthcare providers, governments, first responders and critical manufactures. It has been witnessing increased levels of safety and cleaning product sales to large healthcare, government and critical manufacturing customers, which might have favored the first-quarter performance. Further, with customers staying at home amid the pandemic, higher level of e-commerce sales are likely to have contributed to the to-be-reported quarter’s performance.

The company caters to customers in the manufacturing and transportation industries. Activity in manufacturing has been improving so far this year. However, this might have been offset by the weakness in transportation sector. Also, its Canada business remains impacted by pandemic induced weakness.

The COVID-19 pandemic las led to a shift in demand toward lower-margin products. In addition, higher operating costs in response to the COVID-19 pandemic and related activities may have impacted operating margin in the quarter to be reported. Moreover, the company is facing higher freight costs. Nevertheless, its ongoing cost control measures undertaken in the wake of the ongoing uncertainty may have offset some of the impact.

Price Performance

Shares of the company have gained 52.9% in a year compared with the industry’s rally of 72.2%.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Grainger this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Grainger has an Earnings ESP of +2.36%.

Zacks Rank: The company currently carries a Zacks Rank of 3.

Other Stocks Poised to Beat Earnings Estimates

Here are some other Industrial Products stocks, which you may consider as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases.

Zebra Technologies Corporation ZBRA, currently a Zacks #2 Ranked stock, has an Earnings ESP of +1.63%. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO Corporation AGCO has an Earnings ESP of +2.94% and a Zacks Rank of 3, currently.

O I Glass, Inc. OI has a Zacks Rank #3 and an Earnings ESP of +2.11%, at present.

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