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Let's talk about the popular W.W. Grainger, Inc. (NYSE:GWW). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on W.W. Grainger’s outlook and valuation to see if the opportunity still exists.
What Is W.W. Grainger Worth?
W.W. Grainger appears to be overvalued by 27% at the moment, based on our discounted cash flow valuation. The stock is currently priced at US$1,014 on the market compared to our intrinsic value of $800.08. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that W.W. Grainger’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
See our latest analysis for W.W. Grainger
What kind of growth will W.W. Grainger generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 20% over the next couple of years, the future seems bright for W.W. Grainger. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? GWW’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe GWW should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.