Value
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.3 |
| P/S | 7.9 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 4.5 |
| PEG | 4.3 |
| Analyst target | 3.0 |
- ▸Forward P/E: 27.6x
- ▸PEG: 2.18
GWW · Why this verdict
Why W.W. Grainger (GWW) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
W.W. Grainger operates a wide-moat industrial distribution franchise with best-in-class returns and a near-perfect financial health score, but price has effectively reached the near-term target with only 0.7% of upside remaining, the risk-to-reward has turned unfavorable at 0.18-to-1, and earnings consistency has softened — the quality story is intact but the current entry is not.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company carries a wide economic moat, a near-perfect financial health score of 9 out of 9, and returns on equity and assets that rank superior to sector peers — characteristics that mark it as a durable compounding business in industrial distribution. Quality breakdown | Return on equity stays above 35% and the financial health score remains at 8 or higher out of 9 over the next four quarters, confirming the durability of the quality franchise. | →Stable |
| CounterThe elevated return on equity is amplified by a buyback-reduced equity base; if capital returns slow or margins narrow even modestly, the headline quality figures could deteriorate faster than the underlying competitive position. | ||
With only about 0.7% of headroom remaining to the near-term price target and a risk-to-reward ratio of approximately 0.18-to-1, the current setup offers minimal potential gain relative to the downside, making a new or increased position difficult to justify at these levels. Price targets | The investment case improves only if the price target is revised materially higher, with implied upside expanding above 15% and the reward-to-risk ratio recovering above 1.5-to-1. | Tripped→Stable |
| CounterA high-quality franchise at a stretched near-term level can still be a core holding if the compounding trajectory warrants a higher multiple; the current target may prove conservative if earnings growth accelerates. | ||
The company delivered two earnings misses over the past four quarters with average reported surprises close to flat, suggesting the previous run of clean outperformance has moderated into a more uncertain delivery pattern. Earnings | EPS beats return in each of the next 2 consecutive quarters with positive surprises above 3%, restoring the consistency the quality profile implies. | →Stable |
| CounterTwo misses in an uncertain industrial demand environment may reflect timing rather than structural deterioration; if end-market demand firms, earnings could snap back sharply to a more consistent cadence. | ||
The RSI has reached 74, flagging overbought conditions, while on-balance volume is trending lower even as price pushes near 52-week highs — a divergence between price and volume that often signals distribution near a near-term peak. Momentum breakdown | RSI retreats below 60 and on-balance volume turns to a rising trend for at least 4 consecutive weeks, resolving the current technical divergence. | ↓Deteriorating |
| CounterStrong franchise names can sustain overbought RSI readings for extended periods during institutional accumulation phases; a high RSI alone is insufficient to predict a near-term reversal when quality fundamentals underpin demand. | ||
The company carries a wide economic moat, a near-perfect financial health score of 9 out of 9, and returns on equity and assets that rank superior to sector peers — characteristics that mark it as a durable compounding business in industrial distribution.
→StableQuality breakdown
- Expectation
- Return on equity stays above 35% and the financial health score remains at 8 or higher out of 9 over the next four quarters, confirming the durability of the quality franchise.
CounterThe elevated return on equity is amplified by a buyback-reduced equity base; if capital returns slow or margins narrow even modestly, the headline quality figures could deteriorate faster than the underlying competitive position.
With only about 0.7% of headroom remaining to the near-term price target and a risk-to-reward ratio of approximately 0.18-to-1, the current setup offers minimal potential gain relative to the downside, making a new or increased position difficult to justify at these levels.
Tripped→StablePrice targets
- Expectation
- The investment case improves only if the price target is revised materially higher, with implied upside expanding above 15% and the reward-to-risk ratio recovering above 1.5-to-1.
CounterA high-quality franchise at a stretched near-term level can still be a core holding if the compounding trajectory warrants a higher multiple; the current target may prove conservative if earnings growth accelerates.
The company delivered two earnings misses over the past four quarters with average reported surprises close to flat, suggesting the previous run of clean outperformance has moderated into a more uncertain delivery pattern.
→StableEarnings
- Expectation
- EPS beats return in each of the next 2 consecutive quarters with positive surprises above 3%, restoring the consistency the quality profile implies.
CounterTwo misses in an uncertain industrial demand environment may reflect timing rather than structural deterioration; if end-market demand firms, earnings could snap back sharply to a more consistent cadence.
The RSI has reached 74, flagging overbought conditions, while on-balance volume is trending lower even as price pushes near 52-week highs — a divergence between price and volume that often signals distribution near a near-term peak.
↓DeterioratingMomentum breakdown
- Expectation
- RSI retreats below 60 and on-balance volume turns to a rising trend for at least 4 consecutive weeks, resolving the current technical divergence.
CounterStrong franchise names can sustain overbought RSI readings for extended periods during institutional accumulation phases; a high RSI alone is insufficient to predict a near-term reversal when quality fundamentals underpin demand.
Per-dimension breakdown
Quality
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 3.8 |
| Op margin | 6.7 |
| Net margin | 4.8 |
| Current ratio | 9.1 |
| FCF quality | 5.0 |
| Moat | 7.5 |
| Piotroski F | 10.0 |
- ▸Excellent ROE: 46%
- ▸Earnings quality warning: 65% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
5.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.0 |
| EPS growth | 5.6 |
Momentum
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 1.7 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.5 |
| Analyst rating | 5.0 |
| Price target | 4.0 |
- ▸LLM news sentiment: +0.50 (n=1)
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $3,232,296 (0.005% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.3 |
| quality rank | 9.2 |
| growth rank | 7.2 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.9 |
| support resistance | 4.5 |
| 52w position | 9.3 |
Risk (lower is worse)
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.4 |
| days to cover | 7.1 |
| volatility | 6.9 |
| beta | 6.9 |
| debt equity | 7.2 |
| news risk | 6.0 |
Catalyst
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 4.4 |
| dividend safety | 6.8 |
| news activity | 5.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.50
- EARNINGS_PROXIMITY:15d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.4<4.5
- ASYMMETRY:-3.7=NEGATIVE
Warning (0)
none
Reward-to-Risk
-3.74
Upside
-18.7%
Downside
5.0%
Sizing output
AVOID
SetupRange Bound — RSI 54 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: INSIDER:OK. Top dim: Quality at 7.4; weakest: Momentum at 3.4. No conviction either direction.
The strongest dimensions are Quality at 7.4, Insider at 7.3, and Risk (lower is worse) at 7.1; the weakest are Momentum at 3.4, Value at 3.9, and Catalyst at 4.9. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -3.74 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Best In Class Industrial Franchise
Trip ifReturn on equity falls below 25% for 2 consecutive quarters.
- P2Price Exhausted Risk Reward InvertedTripped
Trip ifImplied upside to the analyst price target expands above 15%, with reward-to-risk recovering above 1.5-to-1.
- P3Earnings Consistency Recently Softened
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P4Overbought With Diverging Volume
Trip ifRSI stays above 70 for more than 8 consecutive weeks without a pullback below 55.