W.W. Grainger’s first quarter results aligned with Wall Street’s revenue expectations and delivered a modest beat on non-GAAP earnings, prompting a positive market reaction. Management credited stable customer demand and continued growth in its Endless Assortment segment, particularly Zoro U.S., as key contributors. CEO Donald Macpherson emphasized the company’s ability to support customers amid a “highly fluid” macro environment, highlighting the importance of on-site execution and resilient supply chains. CFO Deidra Merriwether noted gross margin improvements in both segments, with favorable product mix and ongoing supplier negotiations helping to offset higher selling, general, and administrative costs.
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W.W. Grainger (GWW) Q1 CY2025 Highlights:
- Revenue: $4.31 billion vs analyst estimates of $4.31 billion (1.7% year-on-year growth, in line)
- Adjusted EPS: $9.86 vs analyst estimates of $9.51 (3.7% beat)
- Adjusted EBITDA: $733 million vs analyst estimates of $709 million (17% margin, 3.4% beat)
- The company reconfirmed its revenue guidance for the full year of $17.85 billion at the midpoint
- Adjusted EPS guidance for the full year is $40.25 at the midpoint, missing analyst estimates by 0.6%
- Operating Margin: 15.6%, in line with the same quarter last year
- Organic Revenue rose 4.4% year on year, in line with the same quarter last year
- Market Capitalization: $49.19 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions W.W. Grainger’s Q1 Earnings Call
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David Manthey (Baird) asked about Zoro’s improved profitability and whether current SG&A leverage is sustainable. CFO Deidra Merriwether said revenue growth and better repeat rates are driving leverage, indicating the improvements should persist if growth trends continue.
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Jacob Levenson (Melius Research) questioned Grainger’s ability to shift sourcing away from China in response to tariffs. CEO Donald Macpherson explained that while some categories have alternatives, others are difficult to relocate, and adjustments will happen gradually.
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Ryan Merkel (William Blair) inquired about the extent and timing of tariff-related price increases. Macpherson confirmed that initial increases are focused on direct imports, with broader actions pending further supplier negotiations and cost clarity.
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Christopher Snyder (Morgan Stanley) explored the impact of tariffs on gross margin guidance and the company’s strategy to maintain price-cost neutrality. Merriwether reiterated that price increases will be calibrated to cost changes, with ongoing assessment as the year progresses.
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Patrick Baumann (JPMorgan) probed the exposure of private label products to tariffs and potential profit risks. Macpherson noted that while private label is more exposed, overall risk is mitigated by diversified sourcing and that most competitors face similar challenges.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be closely tracking (1) Grainger’s ability to maintain price-cost neutrality as more tariff-related costs emerge, (2) the pace of growth in the Endless Assortment segment compared to High-Touch Solutions, and (3) signs of margin stability amid shifting segment mix and ongoing cost pressures. The progression of supplier negotiations and customer price sensitivity will also be key factors in evaluating execution against strategic goals.
W.W. Grainger currently trades at $1,024, in line with $1,023 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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