GWW Update: Still compelling

Grainger is not being disrupted by Amazon, or the internet. Yes, 2017 was challenging, but the business has undergone a reset, and is now well positioned to outperform.

Today, GWW is a lowly valued, high quality company, with a solid tailwind and plenty internal change which will lead to very solid operating leverage. 

• We expect sustainable volume growth after the repricing in 2017 will surprise to the upside

• Years of challenging market conditions has ended

• 2019: we think the street is plain wrong at $16.70 EPS. We estimate that numbers have very little downside and 2019 EPS could be $19.30 

• Extremely bearish analysts (3/22 Buy ratings) will be forced to upgrade over the coming 12 months. 

Potential Upside: $390 (+25%): Based on 20x P/E on upside 2019 ests.

Sensible Downside: $280(-10%): Difficult to be more bearish than the street

Link to Research Report