Grainger Jumps Most Since July on Higher Forecast: Chicago Mover

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

Grainger advanced 7.2 percent to $241.88 at the close in New York, the biggest gain since July 18 and the highest level for the stock since at least 1980. The shares have climbed 20 percent this year, while the Standard & Poor’s 500 Index added 10 percent.

The company, which plans e-commerce, enterprise and distribution systems investments this year, expects sales growth of as little as 5 percent, up from a prior forecast of at least 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.”