It has been about a month since the last earnings report for W.W. Grainger (GWW). Shares have lost about 3.9% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is W.W. Grainger due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Grainger Earnings Beat Estimates in Q4, Sales Increase Y/Y
Grainger reported adjusted earnings per share of $9.44 in fourth-quarter 2025, beating the Zacks Consensus Estimate of $9.43. It reported earnings of $$9.71 per share in the year-ago quarter.
Grainger’s quarterly sales rose 4.5% year over year to $4.43 billion. However, the top line beat the Zacks Consensus Estimate of $4.40 billion. Daily sales increased 4.5% from the prior-year quarter. We predicted daily sales to increase 4.9%.
Grainger’s Q4 Segmental Performance
The High-Touch Solutions N.A. segment’s daily sales rose 2.2% in the quarter from the fourth quarter of 2025 due to continued growth in the United States and Canada. The Endless Assortment segment’s daily sales grew 14.3% year over year in the quarter due to strong performance at both MonotaRO and Zoro.
GWW’s Q4 Operational Update
The cost of sales climbed 4.8% year over year to $2.68 billion. The gross profit rose 4.2% year over year to $1.74 billion. The gross margin came in at 39.5% in the quarter compared with the prior-year period’s 39.6%.
Selling, general and administrative expenses rose 6.6% year over year to $1.11 billion. Grainger’s operating income in the quarter was up 0.2% year over year to $634 million. The operating margin came in at 14.3% compared with 15% in the prior-year quarter.
Grainger’s Q4 Cash Flow & Balance Sheet Updates
The company had cash and cash equivalents of $0.59 billion at the end of 2026, down from $1.04 billion at the end of 2024. Cash flow from operating activities was $2.02 billion in 2025 compared with $2.11 billion last year.
The long-term debt was $2.36 billion as of Dec. 31, 2025, compared with $2.28 million as of Dec. 31, 2024. Grainger returned $1.5 billion to shareholders via dividends and share buybacks through 2025.
GWW’s 2025 Performance
Adjusted EPS decreased 9% year over year to $35.40 in 2025, which missed the Zacks Consensus Estimate of $39.45. The figure came below the company’s expected EPS of $39.00-$39.75.
Sales improved 4.5% year over year to $17.94 billion and came within the company’s guidance of $17.8-$18 billion. The top line beat the Zacks Consensus Estimate of $17.92 billion.
Grainger’s 2026 Outlook
The company expects net sales between $18.7 billion and $19.1 billion. Sales growth is expected to be 4.2-6.7%. Daily sales growth is envisioned at 6.5-9%. Earnings per share are expected to be $42.25-$44.75.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, W.W. Grainger has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, W.W. Grainger has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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W.W. Grainger, Inc. (GWW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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