W.W. Grainger just put out a fiscal‑Q4 print that’s hard to oversimplify: revenue beat, EPS just missed, and margins got a little bruised. The headline is the 2026 outline the company laid out, not the Q4 squint. For anyone tracking the stock, the story is more about trajectory than a single quarter’s margin tick.
Q4 in straight numbers — beat on the top, hair short on the bottom
The company brought in $4.43 billion in revenue, up 4.7% year over year and about $40 million ahead of estimates. Adjusted earnings came in at $9.44 per share, $0.02 light of the Street. The operating margin clocked in at 14.3%, a 70 basis‑point drop from the prior year, driven by higher freight, wage inflation, and some mix shift.
Cash flow stayed rock‑solid. Grainger generated $2.0 billion in operating cash flow for the year and returned $1.5 billion to shareholders via dividends and buybacks — a reminder this is a cash‑machine industrial that knows how to recycle capital.
The 2026 playbook — where the focus really sits
For FY26, the company is signaling a clear reset. The guidance range is:
Net sales of $18.7–19.1 billion, a touch above the $18.83 billion consensus.
Sales growth of 4.2%–6.7%.
Daily organic constant‑currency sales growth of 6.5%–9.0% — the real volume‑driven increase, not inflation or M&A.
On the margin front:
Gross margin of 39.2%–39.5%.
Operating margin of 15.4%–15.9%, a step‑up from 14.3% in 2025.
Diluted EPS of $42.25–44.75, a bit under the $43.84 Street number, but in line with the margin‑recovery arc.
Cash flow is planned at $2.125–2.325 billion, with $550–650 million in capex (mostly in tech, warehouses, and sales force) and $950 million–$1.05 billion in buybacks and dividends. The effective tax rate is expected to sit around 25%.
Segment mix — where the growth engine is anchored
The business runs on two legs: High‑Touch Solutions – N.A. and Endless Assortment. For 2026, the company is targeting:
16.9%–17.4% operating margin in High‑Touch, its direct sales, onsite inventory, and MRO‑solutions unit.
10.0%–10.5% operating margin in Endless Assortment, its e‑commerce and broad‑line catalog channel.
High‑Touch already accounts for over 60% of sales and is expected to grow low‑mid‑single digits annually, while the rest of the volume comes from digital, self‑serve, and multi‑year contracts that lock in industrial‑supply relationships. The company is leaning into tools that let customers pre‑pay or lock pricing on multi‑year industrial‑consumables deals, giving Grainger more visibility and reducing customer churn.
Big‑picture context — valuation and positioning
The stock sits around $1,000–$1,100, roughly 20–22× forward earnings, a bit above the broader industrial distribution universe, but that premium reflects the cash‑flow quality and margin profile. The 2026 plan is about mid‑single‑digit growth, margin expansion back above 15% operating, and $1 billion plus in buybacks — a combo that fits the profile of a mature, cash‑heavy industrial with a very clear capital‑return cadence.
Someone’s sitting in the shade today because someone planted a tree a long time ago. ― Warren Buffett.
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