Grainger Earnings: Guidance Takes Minor Hit as Soft Demand Environment Persists

Narrow-moat-rated Grainger reported second-quarter results largely in line with our expectations as sales rose 3.1% year over year, or 5.1% organically. Management noted that growth in the high-touch business was roughly 100 basis points above the firm’s estimate for growth in the total US maintenance, repair, and operations, or MRO, industry. But that constitutes a disappointing performance compared with the company’s goal for outperformance of 400 to 500 basis points, on average. As a result, management slightly lowered its guidance range for 2024 full-year revenue. We do not expect a material revision to our fair value estimate, and shares remain overvalued, in our view.