Seeking Alpha: Grainger Seems To Be A Little Confused

I don't criticize a company like Grainger (NYSE:GWW) (or "W.W. Grainger") lightly. You don't get to be the second-largest MRO distributor in the country by accident, nor are many years of 20% or near-20% ROICs the sort of results that a company just blunders into by accident. What's more, Grainger is very well-diversified across customer and product types, with room to take share and add incremental product categories.

All of that said, I can't get comfortable with the valuation or the strategic direction. It seems to me that Grainger has either not been really thinking through some of its growth initiatives over the past few years or has shown a startlingly low amount of patience with them. Moreover, for Grainger to look cheap in my models there either has to be double-digit annualized FCF growth from here or a lower discount rate that I just frankly wouldn't find acceptable for a cyclically-exposed company in a highly competitive space.

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Grainger Seems To Be A Little Confused