DIA448.09+3.38 0.76%
SPX6,279.35+51.93 0.83%
IXIC20,601.10+207.97 1.02%

W.W. Grainger (NYSE:GWW) Could Become A Multi-Bagger

Simply Wall St·06/21/2025 13:24:31
Listen to the news

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. And in light of that, the trends we're seeing at W.W. Grainger's (NYSE:GWW) look very promising so lets take a look.

Return On Capital Employed (ROCE): What Is It?

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. To calculate this metric for W.W. Grainger, this is the formula:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.40 = US$2.7b ÷ (US$8.7b - US$2.0b) (Based on the trailing twelve months to March 2025).

Thus, W.W. Grainger has an ROCE of 40%. That's a fantastic return and not only that, it outpaces the average of 11% earned by companies in a similar industry.

See our latest analysis for W.W. Grainger

roce
NYSE:GWW Return on Capital Employed June 21st 2025

Above you can see how the current ROCE for W.W. Grainger compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for W.W. Grainger .

What Does the ROCE Trend For W.W. Grainger Tell Us?

W.W. Grainger has not disappointed with their ROCE growth. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 65% over the last five years. Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies. The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects.

Our Take On W.W. Grainger's ROCE

To sum it up, W.W. Grainger is collecting higher returns from the same amount of capital, and that's impressive. Since the stock has returned a staggering 275% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if W.W. Grainger can keep these trends up, it could have a bright future ahead.

If you'd like to know about the risks facing W.W. Grainger, we've discovered 2 warning signs that you should be aware of.

If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning high returns on equity.

Risk Disclosure: The content of this page is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial circumstances. All investments involve risk and the past performance of securities, or financial products does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing. For more details, please refer to risk disclosure.
During the campaign period, US stocks, US stocks short selling, US stock options, Hong Kong stocks, and A-shares trading will maintain at $0 commission, and no subscription/redemption fees for mutual fund transactions. $0 fee offer has a time limit, until further notice. For more information, please visit:  https://www.webull.hk/pricing
Webull Securities Limited is licensed with the Securities and Futures Commission of Hong Kong (CE No. BNG700) for carrying out Type 1 License for Dealing in Securities, Type 2 License for Dealing in Futures Contracts and Type 4 License for Advising on Securities.
Language

English

©2025 Webull Securities Limited. All rights reserved.