Shares of W.W. Grainger Inc. (NYSE: GWW) jumped in trading Tuesday after the industrial supply company reported third-quarter results. After a rapid rise that moderated briefly late in the morning, shares continued to climb, notching a gain of 12.1% as of 2:32 p.m. EDT.
Continue Reading Below
Sales for the quarter were up 2% to $2.64 billion, but the period had one fewer day than in 2016, so daily sales rose 3%. Net income fell 13% to $162 million, and earnings per share dropped 9% to $2.79.
Results like those won't wow growth investors, but they did top analysts' estimates of $2.63 billion in revenue and $2.57 per share in earnings. On top of those Q3 beats, management said it expects full-year earnings to be in the range of $10.40 to $10.90 per share, above analysts' consensus estimate of $10.37.
Sometimes beating expectations is enough to send a stock shooting higher. Investors had clearly lowered their expectations for Grainger to the point where even a big drop in profits impressed them.
The stock's performance in the future will be defined by improvement in Canada and the U.S. business now that it has completed the divestiture of a non-core specialty business. We may be seeing some signs of improvement in the core business, but I'd like to see more consistency before getting too bullish on the stock.
10 stocks we like better than W.W. GraingerWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and W.W. Grainger wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of October 9, 2017