LONDON, UK / ACCESSWIRE / October 19, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on W.W. Grainger, Inc. (NYSE: GWW) ("Grainger"), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=GWW, following the Company's announcement of its third quarter fiscal 2017 operating results on October 17, 2017. The supplier of maintenance, repair, and operating products reported a 2% growth in sales, while the Company narrowed its 2017 guidance and maintained EPS midpoint. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Earnings Reviewed

For the third quarter ended September 30, 2017 Grainger reported sales of $2.64 billion, up 2% compared to sales of $2.60 billion in Q3 2016. The Company had 63 selling days in the reported quarter, one fewer than the year-ago corresponding period. Grainger's sales beat analysts' estimates of $2.63 billion.

On a daily basis, Grainger's sales increased 3% on a y-o-y basis. The daily sales performance was driven by 8% from volume, partially offset by declines of 4% from price and 1% from the divestiture of a specialty business in the United States.

During Q3 2017, Grainger's operating earnings of $281 million, declined 13% compared to operating earnings of $323 million in Q3 2016. The decline was driven by lower gross profit due to the strategic pricing initiatives.

Grainger's net earnings totaled $162 million for Q3 2017, down 13% compared to net income of $186 million in Q3 2016. The Company's earnings per share of $2.79, fell 9% versus $3.05 per share in the year ago same period. Grainger's adjusted earnings totaled $2.90 per share in Q3 2017, ahead of Wall Street's expectations of $2.63 billion.

Grainger's Segment Results

Grainger has two reportable business segments, the United States and Canada, which represented approximately 80% of Company sales for Q3 2017.

During Q3 2017, sales in the US segment decreased 1% to $2.02 billion on a y-o-y basis, while they grew 1% on a daily basis versus Q3 2016. The increase in daily sales was driven by a 7% increase in volume partially offset by declines of 5% from price and 1% from the divestiture of a specialty business.

For Q3 2017, operating earnings for the US segment declined 13% to $297.86 million, driven by lower gross profit. The segment's gross profit margins for the reported quarter declined 1.9% as a result of the strategic pricing initiatives. Operating expenses for the segment were flat on a y-o-y basis.

During Q3 2017, sales in the Canada segment grew 5% to $188.22 million, while it grew 7% on a daily basis versus Q3 2016. The business in Canada posted a $14.97 million operating loss in the reported quarter, improving 1% on a y-o-y basis. The gross profit margin in Canada improved by 0.8% versus the prior year, primarily due to lower inventory reserve requirements. The Canadian segment's operating expenses increased grew 6% in Q3 2017 on a y-o-y basis and included $5 million of restructuring charges related to facility and headcount reductions.

Sales for the Other Businesses increased 11% to $536.93 million for Q3 2017 on a y-o-y basis, and were up 13% versus the prior year's same quarter. The increase was driven by 15% of growth from volume and price, partially offset by a 2% decline from foreign exchange. In the reported quarter, performance for the Other Businesses was driven by 17% sales growth for the single channel online businesses and strong sales growth for the business in Mexico.

During Q3 2017, operating earnings from the Other Businesses of $27 million, advanced 8% versus $25 million in Q3 2016, driven by strong results from Zoro in the United States and MonotaRO in Japan.

Cash Flow

Grainger's operating cash flow was $349 million in Q3 2017 versus $346 million in Q3 2016. The Company utilized the cash generated during the quarter and proceeds from the May 2017 debt offering to invest in the business, pay down short-term debt and return cash to shareholders through share repurchases and dividends.

Grainger's capital expenditures were $60 million in Q3 2017 versus $108 million in Q3 2016. In the reported quarter, Grainger returned $196 million to shareholders through dividends and share repurchases.

Outlook

For FY17, Grainger is forecasting sales growth of 1.5% to 2.5% compared to the earlier guidance of 1% to 4% and earnings per share of $10.40 to $10.90 compared to the earlier announced earnings per share forecasts in the band of $10.00 to $11.30. The midpoint of 2017 earnings per share guidance remains unchanged at $10.65.

Stock Performance

On Wednesday, October 18, 2017, the stock closed the trading session at $208.81, rising 1.65% from its previous closing price of $205.42. A total volume of 3.06 million shares have exchanged hands, which was higher than the 3-month average volume of 991.21 thousand shares. W.W. Grainger's stock price surged 22.38% in the last one month, 25.82% in the past three months, and 6.56% in the previous six months. The stock is trading at a PE ratio of 24.03 and has a dividend yield of 2.45%. The stock currently has a market cap of $11.81 billion.

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