W.W. Grainger (NYSE:GWW) announced its results for the most recent quarter on October 16, 2012. W.W. Grainger is a distributor of facilities maintenance products and provides services and related information used by businesses and institutions throughout North America.
In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: 5 Tricks Companies Use During Earnings Season
The Numbers: W.W. Grainger's revenues met expectations, though the company's EPS fell short of predictions. The company reported $2.15 per share versus the $2.95 per share estimate and revenues of $2.28 billion versus the $2.27 billion estimate. EPS fell 14.3% while revenue climbed 7.9% from the same period last year. W.W. Grainger's revenue has grown during each of the past four quarters on a year-over-year basis. W.W. Grainger reported net income of $155.4 million during the third quarter. This is a 14.7% decline from last year. With last quarter's falling profit, the company ends a run of four consecutive quarters of year-over-year profit increases.
Management Quote: "We delivered a solid quarter, with stronger organic sales growth in September than in August and continued to gain market share, expand margins and generate nearly $100 million in operating cash flow over the prior year. We are also resolving an ongoing dispute with the GSA and USPS and are pleased to be near final settlement with the DOJ. We value our long-standing relationship with these important federal government customers and look forward to continuing to expand the products and services we provide to them in the future," said Chairman, President and Chief Executive Officer Jim Ryan.
A Look Back: Net income has increased 9.9% year-over-year on average across the last five quarters. The biggest gain came in the third quarter of the last fiscal year, when income climbed 21.1% from the year-earlier quarter.
Looking Ahead: Over the past 60 days, the outlook for the company's performance next quarter has become increasingly unfavorable. The average estimate for the fourth quarter is $2.51 per share, a drop from $2.54. Decreasing earnings estimates is generally a negative sign as it suggests analyst believe future earnings to be weaker than previously anticipated. For the fiscal year, the average estimate has moved down from $10.72 a share to $10.64 over the last 90 days.