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W.W. Grainger supplies the tools, safety equipment and other products that businesses, government agencies and institutions need to maintain facilities and keep operations running. Customers pay mainly for the products they buy, rather than for standalone services. Most revenue comes from the United States.
Its North American Grainger-branded business generates most sales. It serves customers with complex purchasing needs: representatives help select products, and KeepStock manages supplies at customer sites. Distribution centers ship orders to customers, while branches offer local pickup and product advice. This business depends on customers’ operating activity and on keeping needed products available for prompt delivery.
Grainger also sells through Zoro in the United States and MonotaRO in Japan. These online businesses let customers search and order from a broader assortment, including products beyond traditional maintenance and repair supplies. Orders reach customers through distribution centers or direct shipments from third parties. Customers and suppliers are both widely spread, with no single customer or supplier accounting for a large share of the business.
The risk section is the longest, dullest part of the filing. This keeps only what can really hurt you: where it hits, how hard, when it plays out.
Every company claims an edge. Each one is checked against hard numbers like margins and returns: which hold, and which line gives way first.
Fastenal competes with Grainger for industrial customers’ supply spending through local branches, online purchasing and on-site inventory services. Watch Fastenal’s sales to business customers for a read on demand for the supplies both companies sell to keep workplaces running.
MSC Industrial Direct Co., Inc. competes with Grainger to sell metalworking and maintenance supplies to industrial customers, with both helping customers choose products and manage inventory. MSC’s metalworking sales offer a more focused view of manufacturing demand than Grainger’s broader product mix.
Applied Industrial Technologies and Grainger both depend on industrial customers buying maintenance products and paying for technical support and inventory services. Watch Applied’s maintenance-product sales for a read on spending to keep factories’ production equipment running.
Genuine Parts competes with Grainger through its Industrial business, but most of its sales come from distributing automotive parts to commercial and retail customers. Watch Industrial revenue rather than total sales for the closer read on the maintenance and repair spending that matters to Grainger.
EIA Crude Oil Stocks Change (Oct/16)
The EIA’s weekly stocks track U.S. crude oil and gasoline inventories; tighter supplies can lift fuel and freight costs and petroleum-derivative costs Grainger faces, squeezing the margin between what it pays and earns on sales.
Falling inventories point to tighter oil and fuel supply and possible increases in Grainger’s fuel, freight and petroleum-derivative costs; rising inventories may signal looser supply and cost relief.
Durable Goods Orders MoM (Sep)
Durable-goods orders track demand for long-lasting products and equipment, which can signal how much Grainger’s customers are producing and investing—and how much they may buy in MRO supplies.
Expected0.2%Last release-0.1%
If it comes in above expectations
If the reading is above the 0.2% estimate, it is above the previous -0.1%. Stronger orders may mean Grainger’s manufacturing and other business customers are busier and buy more MRO products; weaker orders may lead them to scale back purchases.
If it comes in below expectations
Weaker orders may mean Grainger’s manufacturing and other business customers are less active and buy fewer MRO products; stronger orders may support more purchases.
Fed Interest Rate Decision
The Fed’s decision tracks the U.S. policy interest rate; because Grainger has debt and commercial paper, the rate can affect what it pays to borrow and the earnings left after interest costs.
Expected4.0%Last release4.0%
If it comes in above expectations
A higher rate may raise costs on borrowing that reprices and on new borrowing, leaving less earnings after interest for Grainger; a lower rate may ease that burden.
If it comes in below expectations
A lower rate may ease costs on borrowing that reprices and on new borrowing, leaving more earnings after interest for Grainger; a higher rate may increase the burden.
JOLTs Job Openings (Sep)
Job openings track employers’ demand for workers; because Grainger says it must hire and retain employees and may face rising wages and benefits, a tighter labor market can raise its costs.
Expected7.0MLast release7.079M
If it comes in above expectations
More openings may intensify competition for Grainger’s sales, technical and supply-chain employees, pushing wages and benefits higher and raising the cost of running its business.
If it comes in below expectations
If the reading is below the 7.0M estimate, it is below the previous 7.079M. Fewer openings may ease competition for Grainger’s employees and pressure on wages and benefits, reducing cost pressure; more openings may intensify it.
W.W. Grainger, Inc. earningsThis company
Grainger’s report will show whether it can keep its gross margin while industrial customers buy more maintenance and operating supplies.
Read High-Touch Solutions sales growth alongside gross margin, the share of product revenue left after product costs. Sales growth with a stable or rising margin would show that customer demand is supporting shipments without eroding the return on each sale. Slower sales or a further margin decline would point to weaker demand, or price competition and product or delivery costs squeezing that return.
Non Farm Payrolls (Oct)
The monthly jobs report tracks employment growth; stronger hiring can tighten the labor market for Grainger’s employees and raise the wages and benefits it pays, increasing operating costs.
More jobs added suggest stronger hiring competition and possible wage and benefit increases for Grainger; fewer jobs added suggest less pressure on hiring costs.
Industrial Production MoM (Oct)
Industrial production and capacity use track how much factories, mines and utilities produce and use their facilities, signaling demand for the MRO products Grainger sells to businesses across industries.
Rising production and capacity use point to stronger activity and potentially more MRO purchases from Grainger by industrial customers; falling activity points to possible cutbacks.
