Grainger Raises 2026 Profit Outlook To $47-$48 A Share As October Sales Run About 18%
The CEO guessed data-center spending is "quite a bit" of the demand pickup, and the company lifted its full-year earnings range.
Grainger raised its 2026 outlook to adjusted earnings of $47 to $48 a share, Interim CFO Laurie Thomson said on the industrial supplier's Wednesday earnings call, with preliminary October sales growth of about 18%. Chairman and CEO D.G. Macpherson, asked what is driving demand, guessed data centers account for "quite a bit" of the market's acceleration.
A higher bar for the year
Grainger, which distributes maintenance, repair and operating products to businesses through its High-Touch Solutions North America unit and its online Endless Assortment unit, now expects daily organic constant-currency sales growth of 13% to 14.5% for the year, Thomson said. Its operating margin guide is 16% to 16.2%, up 10 basis points at the midpoint from the prior outlook.
Third-quarter sales rose 14.9% on that daily organic constant-currency basis, with an operating margin of 16.1% and diluted EPS of $12.54, up over 22%. Operating cash flow was $661 million, and the company returned $396 million to shareholders through dividends and buybacks.
For the fourth quarter, Thomson guided to sales north of $4.9 billion and an implied operating margin of about 15.5% at the midpoint. She cited normal seasonal deleverage, higher incentive pay and costs of integrating the technology acquisition, partly offset by a roughly 80-basis-point sequential gross margin gain from supplier rebates. Grainger shares rose about 7% to $1501.49 in Wednesday trading, for a market value of $65.8 billion.
Data centers, by Macpherson's guess
Asked by a Morgan Stanley analyst about project-driven growth and share gains, Macpherson said projects remain a tailwind, though smaller than the 90 basis points cited last quarter. Thomson added that project revenue carries about a 10-basis-point drag on margin.
Macpherson said a big part of the improving market ties to data centers and power generation. The spending shows up through what he called "pseudo retail" organizations that directly control data centers, and through contractors serving those and power projects, where branches nearby are seeing "really, really steep growth."
Sizing it is hard, he said: "It's up to size how much of the market acceleration is data centers." But, he added, "if I were guessing, I'd say it's quite a bit."
On October, he told a Bernstein analyst that 200 basis points of the 18% came from lapping last year's government shutdown, so 16% is the better run rate. Demand has strengthened steadily, he said, "not anything jarring."
Pricing call comes at year-end
Grainger took about 1% in price in September, mostly to cover product costs tied to the conflict in the Middle East, Macpherson said. Freight was about a 20-basis-point drag in the quarter, and he said the path of the war will shape what the company does on January 1.
The company will report its decision at the end of the year, he said, along with how much incentive pay resets in 2027.
Macpherson said the company will tell investors at year-end what pricing it chose for the start of 2027.
Sources
- W.W. Grainger Q3 2026 Earnings Call Transcript — benzinga.com
- W.W. Grainger (GWW) Q3 Earnings and Revenues Top Estimates — Yahoo Finance
- W.W. Grainger (GWW) Q3 Earnings: How Key Metrics Compare to Wall Street Estimates — Yahoo Finance
- W.W. Grainger: Q3 Earnings Snapshot | 9news.com — Associated Press
- W.W. Grainger Earnings Ahead: What Past Reactions Say About The Stock — Yahoo Finance
