On April 16, industrial supply company W.W. Grainger (NYSE:GWW) released its first-quarter earnings for the period ended March 31.
- This quarter, Grainger illustrates how operating leverage and share repurchases can turn reasonable sales growth into excellent profit growth.
- Superb operating performance, coupled with the company continuing "to gain share in this fragmented industry by serving our customers well," caused management to raise the lower end of its guidance.
- Based on the volume of recommendations in Motley Fool CAPS, I'm guessing most of you know little about the industrial supply sector. Here's a taste. Grainger is a three-star stock, while MSM Industrial Direct (NYSE:MSM), Applied Industrial Technologies (NYSE:AIT), and Fastenal (NASDAQ:FAST) are all five-star stocks. Find out why Fools in our community intelligence database love them -- check out CAPS today.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q1 2007 |
Q1 2006 |
Change | |
|---|---|---|---|
|
Sales |
$1,547 |
$1,419 |
9% |
|
Net Profit |
$102 |
$86 |
18.1% |
|
EPS |
$1.17 |
$0.93 |
25.8% |
|
Diluted Shares |
86.8 |
92.5 |
(6.1%) |
Get back to basics with the income statement.
Margin Checkup
|
Q1 2007 |
Q1 2006 |
Change* | |
|---|---|---|---|
|
Gross Margin |
40.9% |
40.2% |
0.7 |
|
Operating Margin |
10.5% |
9.5% |
1.0 |
|
Net Margin |
6.6% |
6.1% |
0.5 |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q1 2007 |
Q1 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$325.5 |
$493.9 |
(34.1%) |
|
Accounts Rec. |
$611.1 |
$569.6 |
7.3% |
|
Inventory |
$815.9 |
$805.6 |
1.3% |
|
Liabilities |
Q1 2007 |
Q1 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$378.4 |
$357.9 |
5.7% |
|
Long-Term Debt |
$4.9 |
$4.9 |
0% |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q1 2007 |
Q1 2006 |
Change | |
|---|---|---|---|
|
Cash From Ops. |
$73.1 |
$26.9 |
171.9% |
|
Capital Expenditures |
$32.2 |
$28.6 |
12.5% |
|
Free Cash Flow |
$40.9 |
($1.8) |
N/A |
Free cash flow is a Fool's best friend.
Related Foolishness:
Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.
At the time of publication, retail editor David Meier did not own stock in any of the companies mentioned. Fool rules are here.
