W.W. Grainger, Inc. (GWW) vs Watsco, Inc. (WSO.B)

W.W. Grainger, Inc. and Watsco, Inc. are both Industrial Distribution companies. W.W. Grainger, Inc. is the larger, with a market value of $60.1B against $16.0B — 3.8× the size. Watsco, Inc. trades at the lower P/E: 28.3× against 31.7×. W.W. Grainger, Inc. grew revenue faster over the last twelve months: 7.80% against −2.98%. W.W. Grainger, Inc. has the higher net margin (9.92% vs 6.54%) and the higher return on invested capital (27.1% vs 14.2%). Both pay a dividend; Watsco, Inc. yields more (2.69% vs 0.83%). Across the 23 metrics below, Watsco, Inc. leads on 14 and W.W. Grainger, Inc. on 9.

Valuation

Metric GWW WSO.B Industrial Distribution median
P/E 31.65 28.34 28.81
P/S 3.11 1.71 1.10
P/B 13.00 3.59 3.59
Price to free cash flow 38.12 17.88 22.50
EV/EBITDA 20.15 16.64 15.13
EV/Sales 3.21 1.67 1.31
Earnings yield 3.16% 3.53% 3.16%
Free cash flow yield 2.62% 5.59% 3.85%

Profitability

Metric GWW WSO.B Industrial Distribution median
Gross margin 39.40% 27.51% 30.34%
Operating margin 14.57% 9.40% 8.06%
Net margin 9.92% 6.54% 4.95%
Free cash flow margin 8.17% 9.57% 4.67%
Return on equity 43.51% 14.23% 14.29%
Return on assets 20.16% 9.71% 5.30%
Return on invested capital 27.09% 14.18% 8.13%

Growth

Metric GWW WSO.B Industrial Distribution median
Revenue growth (TTM) 7.80% (2.98%) 7.80%
EPS growth (last fiscal year) (8.55%) (7.89%) —
Revenue growth, 5-year CAGR 8.75% 7.45% 9.01%
Net income growth, 5-year CAGR 19.67% 15.06% 0.99%

Health

Metric GWW WSO.B Industrial Distribution median
Debt to equity 0.53 0.00 0.53
Current ratio 2.81 3.20 2.47
Net debt to EBITDA 0.69 (0.95) 1.17

Dividend

Metric GWW WSO.B Industrial Distribution median
Dividend yield 0.83% 2.69% 1.54%
Payout ratio 0.20 0.63 0.00

Size

Metric GWW WSO.B Industrial Distribution median
Market cap 60.08b 15.98b 5.60b

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