* Note: Prices are in Million (M) USD.
Description:
W. W. Grainger, Inc. is an American Fortune 500 industrial supply company founded in 1927 in Chicago by William W. (Bill) Grainger.
These criteria used Company's Cash, EBITDA and Debt balance to determines its fair value:
Cash : $1,036 M
Debt : $3,183 M
EBITDA : $2,950 M
Net Debt (Debt - Cash): $2,147 M
Since Net Debt is covered by EBITDA within 1 year, 3 points assigned.
This criteria used industry in which company operates:
Sector: Industrials
Industry: Industrial distribution
Based on industry, 3 points assigned.
This criteria used Company's Price To Earning (P/E) Ratio to determines its fair value:
Forward PE Ratio: 24.62
Since Forward PE Ratio is between 20 - 25, 2 points assigned.
This criteria used Company's ability to convert Sales into free cash flow to determine fair value:
Using last 20 overlapping fiscal years (max 20).Average Free Cash Flow: $718 M
Average Revenue: $10,072 M
Revenue Converted To Free Cash Flow (%): 7.1%
Since Free Cash Flow (FCF) to Revenue percentage is less than 15, 1 point assigned.
This criteria used company's growth potential to calculate its fair value:
Latest Revenue (2024-12-31): $17,168 M
Revenue 4 Years Ago (2020-12-31): $11,797 M
Last 5 Years Average Revenue Growth: 9%
Since Revenue Growth is between 5 - 10, 2 points assigned.
This criteria used Company's ability to buy back its own share:
Latest Share Count (2024-12-31): $49 M
Share Count 5 Years Ago (2020-12-31): $54 M
Company is buying back its own shares, 3 points assigned.
This criteria used Company's dividend payout ratio to determine its fair value:
Next Year Earnings Per Share (EPS): $43.03
Trailing 12-Month Earnings Per Share (EPS): $39.38
Average Earnings Per Share (EPS): $41.21
Dividend Per Share (DPS): $8
Payout Ratio: 20%
Dividend Yield: 1%
Since company Payout Ratio is less than 50, 2 points assigned.
Since Dividend Yield is less than 1, 0 point assigned.
This criteria used Company's Return On Equity (ROE%) to determine its fair value:
Using last 20 valid ROE years (max 20).Average ROE: 33.8%
Since Average ROE is greater than 20, 5 points assigned.
This criteria used Company's current price to its 52 week low price to determines its fair value:
Current Price: $1,014
52-Week Low: $890
Threshold Price (15% Above 52-Week Low): $1,023
Since Current price is within 15% threshold, 5 points assigned.
This criteria used Company's Market Cap to determines its fair value:
Market Capitalization: $47,612 M
Since Market Cap is between 10B - 100B, 2 points assigned.
% Exposure to Total Portfolio
Based on the market cap, we recommend do not exceed 3% exposure of Total Portfolio.
Value-Trade has assigned 28 points to above WW Grainger Inc (GWW) stock.
Heads up: One or more P/E inputs look exaggerated and may skew the blend.
• ROE Based PE
37.07 (>2× median)
Further research is recommended; please use your own due diligence.In such cases, multiplying earnings by the long-run average P/E typically gives a closer, more reliable fair value.
Rule of thumb: Last 20 Years Avg P/E (20.14)
× EPS ($41.21) = $829.87.
Last 20 Years Avg PE 20.14, Fair Value PE 15, Industry Based PE 15, Growth Based PE 9, RCFC Based PE 15.7, ROE Based PE 37.07, Risk-Free Anchored PE (25% MoS) 17.08. Based on these 7 values, average assigned is 18.43. Value-Trades has assined P/E value 18.43. Since an average (Current Year EPS + Next Year EPS) earning per share is $41.205.
The fair value of WW Grainger Inc (GWW) stock should be (18.43 x $41.205) = $759.32.
