Tag: Top Stocks

Categories
Technology Stocks

Netwealth remains overvalued yet well positioned

fintech icon on abstract financial technology background represent Blockchain and Fintech Investment Financial Internet Technology Concept.

The company charges for its software based on the value of funds under management on its platform, comprising over 95% of group revenue, in addition to providing Netwealth-branded investment products, which are managed by third-party investment managers.

Netwealth has exploited the bureaucracy and lethargy of the relatively small number of large and dominant Australian financial services firms to develop a superior investment administration platform that has quickly increased funds under administration (FUA). The company has benefited from regulatory change such as the Future of Financial Advice (FOFA) reforms, which require financial advisors to act in their clients’ best interests. It also got the advantage of banning of trail commission fees previously paid by investment administration platforms and investment advisors for recommending their products. Despite being the largest of the independent investment platforms, Netwealth has a number of independent platform competitors such as Hub 24 and Praemium.

Financial Strength:

The service-based and capital-light business model of Netwealth has minimum requirement for debt or equity capital, which keeps it in good financial health. The company expenses, rather than capitalises, research and development costs, which results in strong cash conversion. This means that most operating cash flow is available for dividend payments.

Funds under management and administration (FUMA) increased by 52% in fiscal 2021, the fee rate, or revenue divided by FUMA, fell by 23% due to pricing pressure, resulting in revenue growth of 17%. The PE ratio of Netwealth, in 2021, is as high as 78.0, which makes it overvalued.

From a balance sheet perspective, Netwealth remains in excellent shape, with net cash balance of AUD 81 million at the end of fiscal year 2021 and a consistent net cash balance since listing on the ASX in 2017.

Bulls Say:

Netwealth has only a small proportion of the investment administration market, at around 4%, but has won market share quickly, and significant growth potential remains.

Netwealth has a low fixed-cost base which means operating leverage is high and further strong revenue growth should be amplified at the EPS level. A high single digit CAGR increase in investment administration platform industry is expected which would provide a strong underlying tailwind for Netwealth.

Company Profile:

Netwealth provides cloud-based investment administration software as a service, or SaaS, in Australia via its proprietary platform. Netwealth’s platform provides portfolio administration, investment management tools, and investment and managed account services to financial intermediaries and directly to clients. The company charges SaaS fees based on funds under management on its platform. Netwealth also offers Netwealth-branded investment products on its platform which are managed by third-party investment managers.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Shares Technology Stocks

Mirvac Group Ltd (ASX: MGR) Updates

20025825 - closeup image of businessman drawing 3d graphics
  • High quality portfolio composition with stronger weighting towards Melbourne and Sydney urban areas minimizing risk from submarket weakness from Brisbane. 
  • MGR has secured 90% of expected Residential EBIT for FY22.
  • Strong pipeline of residential projects to come, delivering earnings growth by FY22. 
  • Solid balance sheet. Gearing at 22.8% (at lower end of target range of 20%-30%).
  • Continuing recovery in weak retail sales especially for supermarkets.
  • Strong management team.

Key Risks

  • Deterioration in property fundamentals for Office, Industrial and Retail portfolio, such as delays with developments or lower than expected rental growth causing downward asset revaluations.
  • Tenant defaults as the economic landscape changes (increasingly competitive retail sector especially from online retailers such as Amazon). For instance, retailer bankruptcies causing rising vacancies in the retail portfolio.
  • Generally softening outlook on the broader retail market. 
  • Residential settlement risk and defaults. 
  • Higher interest rates impacting debt margins. 
  • Consumer sentiment towards impact of higher interest rates and effect on retail and residential businesses. 

FY21 Results Summary

Operating profit of $550m was down -9% over pcp and operating EBIT of $704m declined -12% over pcp, negatively impacted by lower development profit and higher unallocated overheads, partially offset by growth in NOI (especially growth in Integrated Investment Portfolio NOI following newly completed office asset developments).However, statutory profit was up +61% to $901m and EPS of 14cpss exceeded management’s earnings guidance of greater than 13.7cpss. 

AFFO declined -23% over PCP, reflecting the lower operating earnings together with increased tenant incentives and normalization of maintenance capex. Total distribution was $390m, representing a DPS of 9.9cpss, an increase of +9%, funded from operating cash flows which increased +41% over pcp to $635m, driven by final fund through receipts following capitalization of Older fleet, lower development spend and stronger cash collection from the investment portfolio. Net tangible assets (NTA) per stapled security increased +5% over PCP to $2.67.

The Company extended its development pipeline, ending the year with $28bn across mixed use, office, industrial, residential and build to rent. Balance sheet remained strong with cash and undrawn debt facilities of $867m, investment grade credit ratings of A3/A- by Moody’s/Fitch, gearing of 22.8% (lower end of target range of 20-30%). The Company saw cost of debt decline -60bps over PCP to 3.4%, with management expecting further reduction in FY22.

Company Description  

Mirvac Group Ltd (ASX: MGR) is a real estate investment and development company. The company operates in Residential and Commercial & Mixed Use space within the real Estate sector. Mirvac Group Ltd is headquartered in Sydney, Australia.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Dividend Stocks Philosophy Technical Picks

Narrow-Moat Sysco’s Recipe for Growth Is Cooking up Improved Performance

the food-service market has nearly fully recovered, with sales at 95% of prepandemic levels as of the summer of 2021, and Sysco has emerged as a stronger player, with $2 billion in new national account contracts (3% of prepandemic sales) and 13,000 new independent restaurant customers. The plan should allow Sysco to grow 1.5 times faster than the overall food-service market by fiscal 2024. Sysco is investing to eliminate customer pain points by removing customer minimum order sizes while maintaining delivery frequency and lengthening payment terms. It improved its CRM tool, which now uses data analytics to enhance prospecting, rolled out new sales incentives and sales leadership, and is launching an automated pricing tool, which should sharpen its competitive pricing while freeing up time for sales reps to pursue more value-added activities, such as securing new business.

Further, Sysco has switched to a team-based sales approach, with product specialists that should help drive increased adoption of Sysco’s specialized product categories such as produce, fresh meats, and seafood. Lastly, Sysco is launching teams that specialize in various cuisines (Italian, Asian, Mexican) that should drive market share gains in ethnic restaurants. Looking abroad, Sysco has a new leadership team in place for its international operations, increasing our confidence that execution will improve.

Financial Strength 

Sysco’s solid balance sheet, with $5 billion of cash and available liquidity (as of June) relative to $11 billion in total debt, positions the firm well to endure the pandemic. Sysco has a consistent track record of annual dividend increases (even during the 2008-09 recession), and in May 2021 it announced an increase in its dividend, taking the annual rate to $1.88. Sysco has historically operated with low leverage, generally reporting net debt/adjusted EBITDA of less than 2 times. Leverage increased to 2.3 times after the fiscal 2017 $3.1 billion Brakes acquisition, and to 3.7 times in fiscal 2021, given the pandemic. But we expect leverage will fall back below 2 by fiscal 2023, given debt paydown and recovering EBITDA.

In May 2021, Sysco shifted its priorities for cash in order to support its new Recipe for Growth strategy. It’s new priorities are capital expenditures, acquisitions, debt reduction when leverage is above 2 times, dividends, and opportunistic share repurchase. Its previous priorities were capital expenditures, dividend growth, acquisitions, debt reduction, and share repurchases. In fiscal 2022-2024, as it invests to support accelerated growth, Sysco should spend 1.3%-1.4% of revenue on capital expenditures (falling to 1.1% thereafter). 

Bulls Say’s 

  • As Sysco’s competitive advantage centers on its position as the low-cost leader, we think Sysco should be able to increase market share in its home turf over time.
  • Sysco has gained material market share during the pandemic, allowing it to emerge a stronger competitor.
  • Sysco’s overhead reduction programs should make it more efficient, enabling it to price business more competitively, helping it to win new business, and further leverage its scale.

Company Profile 

Sysco is the largest U.S. food-service distributor, boasting 16% market share of the highly fragmented food-service distribution industry. Sysco distributes over 400,000 food and nonfood products to restaurants (62% of revenue), healthcare facilities (9%), travel and leisure (7%), retail (5%), education and government buildings (8%), and other locations (9%) where individuals consume away-from-home meals. In fiscal 2020, 81% of the firm’s revenue was U.S.-based, with 8% from Canada, 5% from the U.K., 2% from France, and 4% other.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Technology Stocks

DoorDash Reported Strong Q2 Growth; Network Effect Remains Intact, but Shares Remain Overvalued

The firm is at the early stages in trying to attract a larger piece of what we estimate could be $1 trillion worth of goods and services by 2025 to its platform. DoorDash benefits from the network effects between merchants, deliverers (or “dashers”), and consumers, plus intangible assets, in the form of data, which we believe together warrant our narrow moat rating. Consumers use DoorDash’s app to order food for pickup or delivery from restaurants. Based on data from Second Measure, DoorDash currently is the market leader in the U.S., with 56% share, above Uber’s 26% and Grubhub’s 18%. The firm has over 450,000 merchants, more than 20 million consumers, and more than 1 million dashers on its platform.

DoorDash has also begun to provide similar service to businesses in verticals other than restaurants, such as grocery, retail, pet supplies, and flowers. With strengthening of the network effect, we expect DoorDash to maintain its leadership position in likely a market where there will be only one other viable player, Uber Eats, in the long run. The firm’s network effect should also lower consumer and deliverer acquisition costs, resulting in further operating leverage and GAAP profitability in 2023. 

Financial Strength 

Our $142 fair value estimate of narrow moat DoorDash and continue to view the very high uncertainty rated stock as overvalued. The firm reported mixed second-quarter results with revenue beating the FactSet consensus estimates, while losses were a bit more than expected. While DoorDash and Uber will hold the number one and the number two positions in delivery within the U.S., DoorDash’s stock price may be displaying too much optimism about how quickly and at what cost the firm can diversify its business within and outside of the U.S. market. At current levels, we prefer Uber, as our $69 fair value estimate on the stock represents a 61% potential upside. 

DoorDash’s gross order volume increased 70% year over year and 5% from the first quarter to $10.5 billion. Such growth was driven by an increase in the number of orders (69% year over year) and gross order volume per order (up 1%). The higher take rate resulted in $1.2 billion in total revenue, up 83% from last year. The firm generated a GAAP operating loss of $99 million during the quarter compared with $27 million in operating income in the second quarter of 2020. During the second quarter, sales and marketing as a percentage of revenue spiked to 35% (from 25% last year but slightly more comparable to last quarter’s 31%) mainly due to more aggressive marketing to consumers and drivers.

DoorDash went public in late December 2020, raising $3.3 billion to fund its operations as it continues to invest in growth. The firm likely will not become profitable until 2023. DoorDash holds $4.5 billion in cash and cash equivalents and no debt. The firm has access to a $400 million revolving credit facility from which nothing has been drawn.DoorDash burned $159 million and $467 million in cash from operations in 2018 and 2019, respectively, and generated $252 million in cash from operations in 2020 due to a smaller net loss and higher non-cash expenses, especially a significant year-over-year increase in stock-based compensation to $322 million from $18 million. The firm averaged $66 million, or nearly 6% of revenue, in capital expenditures in 2018-20.

Company Profile 

Founded in 2013 and headquartered in San Francisco, DoorDash is an online food order demand aggregator. Consumers can use its app to order food on-demand for pickup or delivery from merchants mainly in the U.S. The firm provides a marketplace for the merchants to create a presence online, market their offerings, and meet demand by making the offerings available for pickup or delivery. The firm provides similar service to businesses in addition to restaurants, such as grocery, retail, pet supplies, and flowers. At the end of 2020, DoorDash had over 450,000 merchants, 20 million consumers, and over 1 million dashers on its platform. In 2020, the firm generated $24.7 billion in gross order volume (up 207% year over year) and $2.9 billion in revenue (up 226%).

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Technology Stocks

Envestnet Inc to Ramp Up Investment Spending to Focus on Financial Wellness

Digital tablet display the stock market data

In 2015, Envestnet acquired Yodlee, which makes up the firm’s data and analytics segment. Yodlee’s revenue consists of its core data aggregation, alternative data to asset managers, and analytics to advisory firms. We do believe this segment is less moaty, as Yodlee faces competition from Plaid and MX Technologies as well as many alternative data providers. Following Visa’s announced (but ultimately nixed) acquisition of Plaid at a high valuation (we estimate over 20 times forward revenue), media reports have indicated that Envestnet is looking to sell Yodlee. For now, we believe Envestnet is comfortable keeping Yodlee in its product portfolio.

Envestnet believes marketplace exchanges can add to growth. In 2019, the company launched an insurance exchange with six national carriers to connect an advisor’s clients with annuity products. In addition to the insurance exchange, Envestnet launched Advisor Credit Exchange to help advisors address the lending needs of their clients. Envestnet is also focusing on growing asset-based revenue by providing value-added services such as impact portfolios, direct indexing, and tax overlays.

Financial Strength

Overall, Envestnet’s financial strength is sound. in our view, The company has used leverage for acquisitions. As of Dec. 31, 2020, Envestnet has approximately $385 million of cash and $756 million in convertible note debt. This equates to a net leverage ratio of about 2 EBITDA. While it’s true that the firm’s wealth solutions segment contains asset-based revenue, net of direct asset-based cost of revenue, these fees are less than 40% of the firm’s revenue. In addition, we estimate that 40% of Envestnet’s AUM/A are not in equities. Given this and the fact that the rest of Envestnet’s revenue is mostly recurring in nature, we’re comfortable with the company’s level of debt.

Bull Says

  • Envestnet has leading market share, and its product suite offers greater breadth than competitors.
  • Envestnet could pursue strategic alternatives with Yodlee.
  • Envestnet should continue to benefit from the trend of advisors leaving wire house firms to start their own practices and the shift from commission-based to fee based advice.

Company Profile

Envestnet provides wealth-management technology and solutions to registered investment advisors, banks, broker/dealers, and other firms. Its Tamarac platform provides trading, rebalancing, portfolio accounting, performance reporting, and client relationship management software to high-end RIAs. Envestnet’s portfolio management consultants provide research services and consulting services to assist advisors, including vetted third-party managed account products. In November 2015, Envestnet acquired Yodlee, a provider of data aggregation.

 (Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Technology Stocks

NortonLifeLock Merging With Avast to Expand Reach within Consumer Security Market; Maintain $21 FVE

Our $21 fair value estimate for no-moat NortonLifeLock after announcing its intention to merge with fellow consume cybersecurity firm Avast. The news follows NortonLifeLock recently acknowledging rumors of Avast combination talks, and we believe this merger is in line with NortonLifeLock’s plan to use mergers as a growth accelerator with a focus on extracting overlapping costs. The deal puts Avast’s enterprise value between $8.6 billion and $9.2 billion, depending on how Avast shareholders elect to receive a majority stock or cash option. We updated our model with the assumption that the merger occurs in the middle of 2022 as expected, helping the company rapidly expand its revenue growth rate and achieve its reiterated adjusted earnings target of $3 per share in the coming years.

NortonLifeLock gains international reach, especially within the important German market, and helps bolster its opportunity with the small business segment through this merger. The combined company will be renamed at a later point and together have about 40 million direct customers and over 500 million total users, as well as about $3.5 billion in combined revenue with a blended adjusted operating margin of 52% (presynergies). 

NortonLifeLock expects to achieve $280 million of annual gross cost synergies, fully realized by the second year post-merger. We believe the merged company will be shareholder centric, with a plan to return 100% of free cash flow through the existing $0.125 quarterly dividend and future share buybacks.

Financial Deals Post – Merger

NortonLifeLock will finance the deal with cash and $5.35 billion of new debt facilities, which the company expects to rapidly pay down post-merger. Avast shareholders are expected to own between 14% and 26% of the combined company, depending on their election, post-merger. In the majority stock option, Avast shareholders receive $2.37 in cash and 0.1937 shares of NortonLifeLock whereas in the majority cash option, Avast shareholders receive $7.61 in cash and 0.0302 shares of NortonLifeLock. In the majority stock option, NortonLifeLock plans to increase its buyback program by $3 billion.

Current NortonLifeLock CEO Vincent Pilette will be the CEO, Avast’s current CEO will become President, and NortonLifeLock’s CFO will retain her role for the combined company. The merged company will have dual headquarters, with Avast in Prague, Czech Republic and NortonLifeLock in Tempe, Arizona. While we appreciate the combined company expanding its geographical footprint, we expect a concerted focus on reducing costs to reel in operating and fixed costs.

Company Profile 

NortonLifeLock sells cybersecurity and identity protection for individual consumers through its Norton antivirus and LifeLock brands. The company divested the Symantec enterprise security business to Broadcom in 2019. The Arizona-based company was founded in 1982, went public in 1989, and sells its solutions worldwide.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Technology Stocks

Syneos Reports Strong Q2 Results; Raising FVE to $64 on Improved 2021 Outlook

the new entity, into the upper echelon of large, global, late-stage contract research organizations, but at the price of a significant debt load. Most of Syneos’ CRO business comes from the most lucrative area of the CRO market: long, complex trials that typically require thousands of patients across the globe and thus have ample room for missteps. Trial sponsors need a CRO not only with strong technical know-how in specific disease areas, but also with the expertise in local country cultures and government relations.

Legacy INC Research was a leader in late-stage clinical research from small- and mid-cap biopharma, while inVentiv Health had better exposure to large pharma. The combined company has a diversified client base and provides a full portfolio of offerings, including staffing solutions and commercialization. While we don’t see significant competitive advantages in the staffing and selling business, both complete Syneos’ portfolio of services and offer flexibility to clients. The lower-margin commercial solutions business has had mixed success, but management’s cross-selling strategy to offer hybrid contracts with both clinical and commercial components should be a boon to the segment.

Financial Strength 

Narrow-moat Syneos reported second-quarter revenue of $1.3 billion, representing nearly a 27% increase year over year. Adjusted EBITDA was $175 million for the quarter, up 47% from the prior-year period. Syneos is recovering well from pandemic-related challenges, as evidenced by its strong year-over-year figures. Due to strong demand across Syneos’ clinical and commercial segments, management has updated its 2021 guidance. Syneos reported solid net new business wins in Clinical and Commercial Solutions, totaling $1.7 billion for the quarter, representing a book-to-bill ratio of 1.33 times. The new business wins contributed to an ending backlog of $11.7 billion for the quarter, up 21% from the prior-year period. 

Syneos ended the quarter with about $261 million of unrestricted cash and total debt outstanding of about $2.9 billion, resulting in a net leverage ratio of 3.8 times. We continue to think Syneos’ positive momentum indicates the operating environment remains strong. Syneos is in middling financial health after the 2017 merger, with about $2.9 billion in total debt weighing down the balance sheet. The deal pushed the company to the top tier of large, global late-stage players, which positions the company to secure deals with large biopharma companies and propel cash generation, but we expect the deal to limit near-term financial flexibility. Syneos’ major debt maturities are pushed out to 2024 and beyond, which provides the company ample opportunity to grow and unearth synergies from the merger.

Bulls Say’s 

  • Syneos’ late-stage contract research business is poised to benefit from stable research and development spending and increased outsourcing in the biopharma industry.
  • High levels of new drug approvals should boost growth in the company’s contract commercialization business.
  • Robust net new business wins should translate to accelerated growth in the contract research segment in the near term.

Company Profile 

Syneos is a global contract research and outsourced commercialization organization that provides services to pharmaceutical and biotechnology firms. Its clinical solutions segment offers early- to late-stage clinical trial support that ranges from specialized staffing models to strategic partnerships that oversee nearly all aspects of a drug program, while the company’s commercialization solutions includes outsourced sales, consulting, public relations, and advertising services.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Funds Funds

Perpetual Smaller Companies Fund

Our Opinion

Highly competent PM

The PM, Jack Collopy has extensive experience and track record as an analyst and fund manager, with 21 years industry experience and 19 years with Perpetual. Mr. Collopy is supported by the wider Perpetual team of analysts, including deputy PM of the Fund Alex Patten. 

Constant rotation/changes at the PM level are a disappointment

 The constant rotation/changes at the PM or co-PM level in the last three years, for the Fund is a disappointment – we note that Mr. Collopy had transition to oversee other Perpetual strategies, leaving then co-PM Mr. Nathan Hughes to oversee the Fund. Mr. Hughes has since transitioned to become PM of Perpetual’s Ethical SRI Fund as of April 2019 (taking over from Mr. Collopy for that Fund). The Fund is now managed by Mr. Collopy with Alex Patten as deputy PM, who we think highly of, and have strong credentials and long investment experience. However, a period of stability at the PM level would give us more comfort before upgrading our recommendation.

Well-resourced investment team

Whilst the team managing the Fund is on the smaller end (relative to peers), the PMs of the Fund is able to tap into the expertise of the wider Perpetual investment team. The investment team is headed by Paul Skamvougeras, Head of Equities, and comprises a large and experienced team of Portfolio Managers (5), head of proprietary research (1), Deputy Portfolio Managers (3), Analysts (6) and the Responsible Investments team (2). Each Portfolio Manager is supported by the team of analysts and back-up procedures are shared throughout the large team. Jack Collopy is the Portfolio Manager of the Perpetual Smaller Companies Fund, with Alex Patten the Deputy Portfolio Manager. As such, ultimate investment responsibility rests with them. Mr. Collopy and Mr. Patten report directly to Paul Skamvougeras.

Solid investment process backed by bottom-up research 

The investment process is a bottom-up selection approach focused on quality and valuation, driven by research and engagement with management, which we think is particularly valuable in valuing smaller companies.

Downside Risks

Australian economic conditions deteriorate. 

The Portfolio Manager/analysts miss-calculate their bottom-up valuation.

Departure of key PM Jack Collopy or Deputy PM Alex Patten.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Technology Stocks

Grainger recovered its stronger sales growth but margin constraints have emerged in 2021.

investment stockbroker risk analysis using multiple devices. Financial analysis using phone app and laptop. Market trading profit.

The growing prevalence of e-commerce has intensified the competitive environment because of more price transparency and increased access to a wider array of vendors, including Amazon Business, which has entered the mix. 

As consumer preference began to shift to online and electronic purchasing platforms, Grainger invested heavily in improving its e-commerce capabilities and restructuring its distribution network. It is the now the 11th-largest e-retailer in North America; it shrank its U.S. branch network from 423 in 2010 to 287 in 2020 and added distribution centers in the U.S. to support the growing amount of direct-to-customer shipments. 

To address this problem, Grainger rolled out a more competitive pricing model. Lower prices hurt gross profit margins, but volume gains, especially among higher-margin spot buys and midsize accounts, have offset price reductions and helped the company meet its 12%-13% operating margin goal by 2019 (12.1% adjusted operating margin in 2019). Grainger continues to expand its endless assortment strategy, but we’re skeptical of the margin expansion opportunity for this business, given strong competition in the space from the likes of Amazon Business and others. 

Financial Strength

As of the second quarter of 2021, Grainger had $2.4 billion of debt outstanding, which net of $547 million of cash represents a leverage ratio of less than 1.1 times our 2021 EBITDA estimate. Grainger’s outstanding debt consists of $500 million of 1.85% senior notes due in 2025, $1 billion of 4.6% senior notes due in 2045, $400 million of 3.75% senior notes due in 2046, and $400 million of 4.2% senior notes due in 2047. Grainger has a proven ability to generate free cash flow throughout the cycle. Indeed, it has generated positive free cash flow every year since 2000, and its free cash flow generation tends to spike during downturns because of reduced working capital requirements. Given the firm’s reasonable use of leverage and consistent free cash flow generation, we believe Grainger’s financial health is satisfactory.

Bull Says

  • With a more sensible, transparent pricing model, Grainger should continue to gain share with existing customers and win higher-margin midsize accounts.
  • As a large distributor with national scale and inventory management services, Grainger is well positioned to take share from smaller regional and local distributors as customers consolidate their MRO spending.
  • Grainger operates a shareholder-friendly capital allocation strategy; it has increased its dividend for 49 consecutive years and has reduced its diluted average share count by over 40% over the last 20 years.

Company Profile

W.W. Grainger (NYSE: GWW) distributes 1.5 million of maintenance, repair, and operating products that are sourced from over 4,500 suppliers. The company serves approximately 5 million customers through its online and electronic purchasing platforms, vending machines, catalog distribution, and network of over 400 global branches. In recent years, Grainger has invested in its e-commerce capabilities and is the 11th-largest e-retailer in North America.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.