W.W. Grainger Inc. (GWW), a supplier of facilities maintenance products, is scheduled to post its third-quarter earnings before the market opens today. On average, 15 analysts surveyed by Thomson Reuters expect the company to post earnings of $1.34 per share for the quarter, with estimates ranging between $1.23 and $1.45 per share. Analysts' estimates typically exclude special items. Sales for the quarter are estimated to be $1.60 billion, representing a 13.1% decline from last year.
In the same quarter a year ago, the Lake Forest, Illinois-based company had recorded earnings of $1.79 per share, on sales of $1.84 billion.
Recently, the company reported a 13% decline in daily sales for the month of August, and 14% in July, mainly hurt by weak demand across all customer end-markets and geographies. In both months, foreign exchange negatively affected sales by approximately 1 percentage point. By segment, August daily sales in the United States declined 14%, while sales in Canada fell 8%, or 5% in local currency. Sales for other businesses grew 16%. In July, Canada daily sales fell 19%, and the drop was 10% in local currency.
In an October 12 research note, Credit Suisse said that it believes Grainger's third-quarter earnings on October 14 would likely surprise to the upside combined with the annual analyst day on November 18, when Grainger would likely lay out its strategic plan. The analyst day will include 2010 guidance and long term margin targets, which the brokerage believes will come in higher than expectations.
Credit Suisse also upgraded its rating on Grainger shares to 'Outperform' from 'Neutral' and increased its price target to $112 from $85. Analyst Mazari said that his upgrade reflects a more attractive risk/reward versus peers, combined with what he believes to be faster top-line growth than the market expects based on his proprietary distribution sales index model. Certain supply chain initiatives, product sku, and market expansion should also drive higher margins over the next couple of years.
While announcing the second quarter results back in July, Jim Ryan, Chairman and Chief Executive Officer of Grainger, had said, "We continue to focus on the things we can control, and we're selectively investing for growth. Businesses and institutions still need to repair and maintain their facilities in this difficult economy. Our multi-channel business model and our exceptionally high service levels allow us to serve our customers well even in these tough times. We have not seen an indication of an economic turnaround at this point but our results indicate that we are gaining market share during this recession. We are in a great position to grow when the economy eventually recovers."
Founded in 1927, Grainger distributes facilities maintenance and other related products in United States, Canada, Mexico, India, China and Panama. Effective with the first quarter of 2009, Grainger has two reportable business segments, the U.S. and Canada, representing about 98% of company sales. The company's highly integrated network includes more than 600 branches, 18 distribution centers and multiple Web sites.
In its preceding second quarter, Grainger reported an 18% decline in net earnings available to shareholders of $90.32 million, or $1.21 per share, hurt by a 13% decline in sales to $1.53 billion, as well as a stronger dollar. Volume for the quarter was down 19%.
Among others in the industry, Winona, Minnesota-based industrial and construction supplies provider Fastenal Co. (FAST) reported Monday a 35% drop in net earnings for the third quarter to $47.59 million or $0.32 per share, hurt by a 21.7% decline in quarterly net sales as well as lower margins. The weakened economy continued to drive down sales by double digits, impacting particularly the company's industrial production business.
Industrial products supplier Applied Industrial Technologies, Inc. (AIT) is slated to release first-quarter earnings on Tuesday, October 20. Wall Street analysts estimate earnings of $0.24 per share, on sales of $421.10 million. In the last year, earnings per share and sales were $0.52 and $543.91 million, respectively.
WESCO International, Inc. (WCC), a Pittsburgh, Pennsylvania-based provider of electrical supplies and industrial products, would release its third-quarter earnings on Thursday, October 22. Analysts project earnings of $0.67 per share, on sales of $1.17 billion for the quarter. In the prior year, the company's earnings were $1.53 per share on sales of $1.63 billion.
MSC Industrial Direct Co., Inc. (MSM), a marketer of industrial products, is slated to release its fourth-quarter earnings on Wednesday, October 21. The company expects earnings to range between $0.33 and $0.37 per share for the quarter, on net sales of between $336.0 million and $348.0 million. The Street analysts currently expect the company to earn $0.36 per share, on sales of $343.42 million.
GWW closed Tuesday's regular trading session at $94.31, up $1.17 or 1.26%, on a volume of 1.2 million shares. In the past 52 weeks, shares have been trading in a broad range of $58.86 to $94.87, with a three-month average volume of 781,086 shares.
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