Maintenance and repair supplier W.W. Grainger (NYSE:GWW) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 1.7% year on year to $4.31 billion. On the other hand, the company’s full-year revenue guidance of $17.85 billion at the midpoint came in 0.7% below analysts’ estimates. Its GAAP profit of $9.86 per share was 4% above analysts’ consensus estimates.
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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)
- EPS (GAAP): $9.86 vs analyst estimates of $9.48 (4% beat)
- Adjusted EBITDA: $745 million vs analyst estimates of $709 million (17.3% margin, 5.1% beat)
- The company reconfirmed its revenue guidance for the full year of $17.85 billion at the midpoint
- Operating Margin: 15.6%, in line with the same quarter last year
- Free Cash Flow Margin: 12.1%, similar to the same quarter last year
- Market Capitalization: $49.34 billion
"Across both segments, our team kicked off 2025 by excelling at what we do best: delivering exceptional service, advancing our capabilities and being a trusted partner for our customers," said D.G. Macpherson, Chairman and CEO.
Company Overview
Founded as a supplier of motors, W.W. Grainger (NYSE:GWW) provides maintenance, repair, and operating (MRO) supplies and services to businesses and institutions.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, W.W. Grainger grew its sales at a decent 8.1% compounded annual growth rate. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. W.W. Grainger’s recent performance shows its demand has slowed as its annualized revenue growth of 4.9% over the last two years was below its five-year trend. 
This quarter, W.W. Grainger grew its revenue by 1.7% year on year, and its $4.31 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 5.7% over the next 12 months, similar to its two-year rate. This projection is underwhelming and implies its newer products and services will not accelerate its top-line performance yet. At least the company is tracking well in other measures of financial health.
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Operating Margin
W.W. Grainger has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 14%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, W.W. Grainger’s operating margin rose by 5.1 percentage points over the last five years, as its sales growth gave it immense operating leverage.
In Q1, W.W. Grainger generated an operating profit margin of 15.6%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
W.W. Grainger’s EPS grew at an astounding 22.8% compounded annual growth rate over the last five years, higher than its 8.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into W.W. Grainger’s earnings to better understand the drivers of its performance. As we mentioned earlier, W.W. Grainger’s operating margin was flat this quarter but expanded by 5.1 percentage points over the last five years. On top of that, its share count shrank by 10.2%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth. 
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For W.W. Grainger, its two-year annual EPS growth of 9.3% was lower than its five-year trend. This wasn’t great, but at least the company was successful in other measures of financial health.
In Q1, W.W. Grainger reported EPS at $9.86, up from $9.62 in the same quarter last year. This print beat analysts’ estimates by 4%. Over the next 12 months, Wall Street expects W.W. Grainger’s full-year EPS of $38.95 to grow 6.1%.
Key Takeaways from W.W. Grainger’s Q1 Results
We enjoyed seeing W.W. Grainger beat analysts’ EBITDA expectations this quarter. We were also happy its organic revenue narrowly outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance slightly missed. Overall, this quarter had some positives. The stock traded up 2.8% to $1,052 immediately following the results.
So do we think W.W. Grainger is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.