Grainger's Strategy To Drive Better Volumes Showing Good Results

I haven’t been all that impressed with Grainger’s (GWW) strategy in recent years, and I think strategic issues are at least in part responsible for the stock’s underperformance relative to other distributors like MSC Industrial (MSM) and Fastenal (FAST) over the last three to five years. But credit where it is due – management’s most recent initiatives appear to be working out well, and the stock is quickly closing those performance gaps, having outperformed MSC, Fastenal, and HD Supply (HDS) over the last two years and especially in the last 12 months.

It remains to be seen whether Grainger can continue to leverage these improvements into ongoing sales and margin expansion. Amazon (AMZN) looms large as a threat and I think the entire industrial distribution space may find margin expansion to be more challenging than the Street expects.

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Grainger's Strategy To Drive Better Volumes Showing Good Results