GWW Hits Key Support – Is This The Buying Opportunity?
W.W. Grainger (GWW) should be on your watchlist. Here is why – it is currently trading in the support zone ($970.77 – $1,072.95), levels from which it has bounced meaningfully before. In the last 10 years, the stock received buying interest at this level 3 times and subsequently went on to generate 14.7% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 2/2/2024 | 6.1% | 48 |
| 7/16/2024 | 24.0% | 118 |
| 3/14/2025 | 14.1% | 63 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For GWW Read Buy or Sell GWW Stock to see how convincing this buy opportunity might be.
Here are some quick data points:
- Revenue Growth: 4.4% LTM and 7.2% last 3 year average.
- Cash Generation: Nearly 8.1% free cash flow margin and 15.3% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for GWW was 3.7%.
- Valuation: GWW trades at a PE multiple of 25.5
- Opportunity vs S&P: Compared to S&P, you get higher valuation, higher 3 year average revenue growth, and lower margins
W.W. Grainger provides maintenance, repair, and operating products and services, including safety supplies, material handling, plumbing equipment, cleaning supplies, and hand tools through diverse distribution segments.
| GWW | S&P Median | |
|---|---|---|
| Sector | Industrials | – |
| Industry | Industrial Machinery & Supplies & Components | – |
| PE Ratio | 25.5 | 24.0 |
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| LTM* Revenue Growth | 4.4% | 5.1% |
| 3Y Average Annual Revenue Growth | 7.2% | 5.2% |
| Min Annual Revenue Growth Last 3Y | 3.7% | -0.3% |
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| LTM* Operating Margin | 15.3% | 18.7% |
| 3Y Average Operating Margin | 15.3% | 17.8% |
| LTM* Free Cash Flow Margin | 8.1% | 13.0% |
*LTM: Last Twelve Months
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
What Is Stock-Specific Risk If The Market Crashes?
That said, GWW isn’t immune to big hits. It fell more than 56% in the Dot-Com Bubble and about 37% in the Global Financial Crisis. The 2018 correction and Covid sell-off both pushed it down close to 38-39%. Even the recent inflation shock caused a nearly 17% drop. The stock has resilience, but when the market turns sour, it still takes a significant hit.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read GWW Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.