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Grainger Jumps Most Since July on Higher Forecast: Chicago Mover

W.W. Grainger Inc. (GWW), a Chicago-based hardware-supply distributor, rose the most in more than eight months after boosting the low end of the company’s prior 2013 profit and revenue forecast.

Grainger advanced 8.5 percent to $244.81 at 2:26 p.m. in New York, the biggest intraday gain since July 18. The shares had risen 12 percent this year through yesterday, while the Standard & Poor’s 500 Index added 8.8 percent.

The company, which plans e-commerce, enterprise and distribution systems investments this year, expects sales growth of a little as 5 percent, up from a prior forecast of a minimum of 3 percent, according to a statement today. Grainger still estimates top-end growth of 9 percent. Earnings per share will be $11.30 to $12. A prior forecast had estimated $10.85 on the lower end.

“Grainger is feeling a bit more optimistic about the overall economy than they did five or six months ago,” said Brent Rakers, an analyst with Wunderlich Securities Inc. in Memphis, Tennessee, who has a buy recommendation on the stock.

When you strip out the “holiday-related noise,” Grainger’s core volume numbers have been stable, Rakers said.

Economic growth in the U.S., where Grainger gets about 77 percent of its sales, is expected to slow to 2 percent this year from 2.2 percent in 2012, according to data compiled by Bloomberg. Still, Grainger raised its 2013 investment target to $160 million from $135 million.

First-quarter net income rose 13 percent to $211.8 million, or $2.94 per share, from $187.5 million, or $2.57, a year earlier. Analysts had estimated $2.75. Sales rose 4 percent to $2.28 billion, trailing analysts estimates of $2.31 billion, on average.

The higher-than-forecast profit “starts with better margin performance in the quarter,” Rakers said. “Some of the margin improvement is just cost control by management.”

To contact the reporters on this story: Thomas Black in Dallas at tblack@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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