Grainger Beats Q2 Earnings Estimates on Margin Gains, Raises Outlook

On a daily, organic constant currency basis, sales increased 13.7%. The comparison adjusts for foreign currency movements and the company’s exit from the U.K. market, including the divested Cromwell business and closed Zoro U.K. operations.

Grainger’s Q2 Segmental Performance

The High-Touch Solutions N.A. segment’s daily sales rose 11.9% year over year in the second quarter of 2026, reflecting strong volume growth and a healthy contribution from pricing. Our model predicted year-over-year organic daily sales growth of 7.4%. 

The Endless Assortment segment’s daily sales grew 13.5% year over year in the quarter, supported by strong performances at MonotaRO and Zoro. Our model predicted organic daily sales growth of 12.2% for the quarter.

GWW Expands Profitability in Q2

Gross profit increased 13% year over year to $1.98 billion. The gross margin expanded 100 basis points to 39.5%, supported by improvement in both segments and benefits related to the U.K. market exit.

The quarter included $43 million in refunds on IEEPA tariffs for products directly imported by Grainger. These refunds reduced the cost of goods sold and provided a roughly 90-basis-point benefit to the gross margin. The cost of sales came in at $3.04 billion, 8.5% year over year.

Selling, general and administrative expenses rose 9.3% to $1.18 billion. Grainger’s operating earnings in the quarter increased 19% year over year to $807 million. The operating margin came in at 16.1% compared with 14.9% in the prior-year quarter.

Grainger Generates Solid Cash Flow

The company had cash and cash equivalents of $589 million as of June 30, 2026, compared with $585 million at the end of 2025. The cash flow from operating activities was $1.18 billion in the first six months of 2026 compared with $1.02 billion in the prior-year period.

Long-term debt was $2.41 billion as of June 30, 2026, compared with $2.36 billion as of Dec. 31, 2025. Grainger returned $341 million to shareholders through dividends and share repurchases during the quarter.

GWW Raises Its 2026 Outlook

Grainger raised its 2026 net sales guidance to $19.4-$19.7 billion from $19.2-$19.6 billion. The company expects reported sales growth of 8.4-10% from the prior mentioned 6.7-9.1%.  

The adjusted earnings guidance was increased to $45.50-$47.25 per share from $44.25-$46.25. Grainger also raised its operating margin outlook to 15.8-16.2% and the gross margin forecast to 39.3-39.6%. The updated outlook reflects strong first-half execution, improving MRO market demand and better top-line leverage.

Grainger Stock’s Price Performance

In the past year, GWW shares have gained 47.4% compared with the industry’s growth of 8%.

Image Source: Zacks Investment Research

GWW’s Zacks Rank

The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Grainger’s Peer Performances

MSC Industrial Direct Company, Inc. MSM reported adjusted earnings per share of $1.43 for the third quarter of fiscal 2026, beating the Zacks Consensus Estimate of $1.28 by 11.72%. The bottom line increased 32.4% from the year-ago quarter’s adjusted earnings of $1.08 per share.

MSC Industrial’s net sales were $1.05 billion, surpassing the consensus estimate of $1.03 billion by 1.74%. Sales increased 7.8% year over year, driven by stronger average daily sales, price benefits and a return to volume growth. Average daily sales increased 7.8% year over year and came in above the company’s quarterly outlook.

SiteOne Landscape Supply, Inc. SITE delivered second-quarter earnings of $3.14 per share, missing the Zacks Consensus Estimate of $3.36. SITE posted earnings of $2.86 in the year-ago quarter.

SiteOne Landscape posted sales of $1.53 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate of $1.54 billion. The company posted sales of $1.46 billion in the year-ago quarter.

Industrial Services Stock Awaiting Results

Hudson Technologies, Inc. HDSN is anticipated to release second-quarter 2026 results on Aug. 5.

The Zacks Consensus Estimate for Hudson’s earnings per share is pegged at 17 cents for the second quarter, implying a decline of 26% from the year-ago reported figure. The consensus estimate for Hudson Industrial’s total sales is pinned at $73.7 million, indicating a year-over-year increase of 1.1%.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research