Graingers Industrial Proxy – US-FOREX.US
If the recovery story that we’ve been hearing from strategists at banks like Barclays and JPMorgan Chase are correct then the Wednesday earnings report from W.W. Grainger should produce some evidence of it. Grainger sells facility maintenance parts and services to businesses in America and around the world. The recovery thesis holds that repairs have been put off during the recession and that inventories are low and in need of replacement. Grainger should benefit from that.The company has also been trying to cut costs throughout the recession and the fruits of those efficiencies should be revealed when it reports.If industrial productivity in the U.S. picks up as some forecasters believe it must, Grainger’s sales should pick up too since it sells the equipment and services that keep factories and retail outlets operating. It competes with WESCO International and Applied Industrial Technologies
. Other competitors like Johnson Controls
and Lear
have been hurt by the crippling slowdown in the auto sector.Analysts polled by Reuters expect earnings of 1.14 a share for the quarter down from 1.25 a share for the quarter ending in March. The most bullish analyst sees 1.289 for the quarter ending in June. Analysts expect 4.86 a share for the year and steady growth in 2010 and 2011 as the economy recovers.On Tuesday analyst Hamzah Mazari of Credit Suisse sent out a short note to clients telling them to by Grainger in advance of earnings because consensus numbers “are too low and… you could see an upside surprise based on price and cost takeout ahead of expectations.” Credit Suisse is neutral on the stock at its current price for 82.50, which is 14 times trailing earnings and 3 times book value. The Credit Suisse note is a short-term trading recommendation.