It was a very mixed year for Grainger (GWW)
in 2018, as the company did well in the first half as the company
reaped the benefits of a significant pricing adjustment, but the shares
significantly underperformed rivals like Fastenal (FAST) and MSC Industrial (MSM)
in the second half as worries mounted about the durability of the U.S.
economic cycle, whether Grainger had meaningful levers to drive growth
beyond price, and whether the company could drive margin leverage.
Unfortunately,
fourth quarter results don’t offer easy answers. Grainger’s guidance
for 2019 looks quite rational insofar as expecting modest market growth
and little price leverage, but expectations of almost 4% relative
outperformance in sales could be too bullish. Grainger’s profitability
is solid, but I believe distributors are going to have a more
challenging time in 2019 and it’s hard to get really excited about these
shares.
Read more here:
Grainger Looks For A Soft Landing As Industrial Headwinds Build
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