Airbnb, Inc. (ABNB - Free Report) closed at $130.86 in the latest trading session, marking a +1.36% move from the prior day. The stock trailed the S&P 500, which registered a daily gain of 1.75%. At the same time, the Dow added 1.86%, and the tech-heavy Nasdaq gained 2.54%.
Shares of the company have depreciated by 2.91% over the course of the past month, underperforming the Consumer Discretionary sector's loss of 1.28%, and the S&P 500's loss of 1.63%.
The upcoming earnings release of Airbnb, Inc. will be of great interest to investors. The company is forecasted to report an EPS of $1.19, showcasing a 15.53% upward movement from the corresponding quarter of the prior year. Meanwhile, our latest consensus estimate is calling for revenue of $3.58 billion, up 15.69% from the prior-year quarter.
For the annual period, the Zacks Consensus Estimates anticipate earnings of $4.91 per share and a revenue of $13.97 billion, signifying shifts of +21.84% and +14.16%, respectively, from the last year.
Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Airbnb, Inc. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.
The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.19% higher. At present, Airbnb, Inc. boasts a Zacks Rank of #3 (Hold).
Valuation is also important, so investors should note that Airbnb, Inc. has a Forward P/E ratio of 26.27 right now. Its industry sports an average Forward P/E of 15.59, so one might conclude that Airbnb, Inc. is trading at a premium comparatively.
We can additionally observe that ABNB currently boasts a PEG ratio of 1.38. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. As the market closed yesterday, the Leisure and Recreation Services industry was having an average PEG ratio of 1.28.
The Leisure and Recreation Services industry is part of the Consumer Discretionary sector. At present, this industry carries a Zacks Industry Rank of 195, placing it within the bottom 21% of over 250 industries.
The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.
Better internet connectivity and smartphone technology laid the foundation for the launch of Airbnb (ABNB +1.45%). This company has been a notable success story of the mobile era. In less than two decades, it has become a dominant force in the travel industry.
For the business, the rise has been impressive. But its investors haven't profited lately. Over the past five years, shares have fallen by 11% (as of June 10). While the stock's movements have been choppy, Airbnb has basically traded sideways for years.
Knowing this backdrop might make it a challenge to be bullish about the stock. But long-term investors may recognize this as an opportunity to own a piece of a successful business with a bright future.
Here are three reasons Airbnb is a top growth stock to buy in June.
Image source: The Motley Fool.
Network effects support its powerful position Among the many things Warren Buffett is known for is popularizing the concept of economic moats -- durable characteristics that allow a company to outperform its rivals over extended periods. Moats are among the hallmarks of a high-quality business.
Airbnb can be categorized as such a company. Its most notable moat is that it benefits from a powerful network effect. The business has 5.5 million hosts with 9 million listings on its platform, which constitute the supply side of the equation. On the demand side, it has the attention of vast numbers of travelers -- there have been 2.5 billion guest arrivals in total since 2007.
This two-sided ecosystem provides a better and better value proposition to both hosts and travelers as it grows. Travelers benefit from a vast selection of accommodations. Hosts who join the network or stay connected to it gain access to a growing number of potential customers.
Airbnb's brand is another important facet of its robust competitive position. The company's name has become a verb, indicating its ubiquity in its industry. It's also worth noting that in 2020, 91% of the traffic that came to Airbnb was from direct or unpaid channels, showing just how much brand awareness it has among consumers.
Ongoing innovation drives financial success Airbnb's management team deserves praise for constantly focusing on product innovation, which is critical in supporting ongoing success. This was on full display last year when the business revamped its app layout and introduced experiences and services to the mix.
In May, Airbnb came out with more feature updates. New services include grocery delivery and luggage storage. New experiences include expert-led landmark visits.
The company is also leveraging artificial intelligence to help travelers compare homes and interpret reviews. And the tech is being deployed to streamline the onboarding process for hosts listing properties.
It's encouraging to see that Airbnb's ultimate focus centers on figuring out ways to improve the experience for its user base. This strategic priority is translating into impressive financial performances.
In Q1 2026, gross bookings and revenue increased by 19% and 18%, respectively. The consensus view among analysts is that sales will grow at a solid compound annual rate of 11.9% from 2025 to 2028.
As a scaled and asset-light operation, Airbnb's profits are sizable. Its average quarterly operating margin in the last 12 months was 18.4%.
Today's Change
(
1.45
%) $
1.87
Current Price
$
130.97
The valuation is reasonable Despite consistent net income and rising revenue, Airbnb's stock has failed to deliver positive returns for investors over the past five years. Yet the company is unquestionably better than it was in the past, which is why it presents a worthwhile buying opportunity today.
The stock trades at a reasonable valuation relative to its growth prospects. The forward price-to-earnings (P/E) ratio of 25.3 [https://finance.yahoo.com/quote/ABNB/key-statistics/] is 14% above the S&P 500 index's 22.2 multiple. But consider that Airbnb's diluted earnings per share (EPS) are projected to grow at an annualized rate of 21.1% between 2025 and 2028.
That bottom-line outlook is bolstered by the company's stock buybacks, which are funded by significant free cash flow. Its outstanding share count at the end of the first quarter was almost 4% smaller than 12 months earlier.
For all of these reasons, Airbnb looks like an underappreciated stock to buy this month.
Somnigroup said the deal would continue its vertical integration strategy, enabling closer collaboration between component engineering and mattress design.
Insiders may stand to receive substantial financial benefits not available to ordinary shareholders.
The proposed transaction may contain terms that could limit superior competing offers.
Shareholders are encouraged to contact the firm to discuss their rights and options at no cost or obligation. We would handle any matter on a contingent fee basis, whereby you would not be responsible for out-of-pocket payment of our legal fees or expenses.
NEW YORK--(BUSINESS WIRE)--Halper Sadeh LLC, an investor rights law firm, is investigating the sale of Leggett & Platt, Incorporated (NYSE: LEG) to Somnigroup International Inc. for 0.1455 shares of Somnigroup common stock for each share of Leggett & Platt common stock. Upon closing of the proposed transaction, Leggett & Platt shareholders will own approximately 9% of the combined company.
Halper Sadeh encourages Leggett & Platt shareholders to click here to learn more about their rights and options or contact Daniel Sadeh or Zachary Halper free of charge at (212) 763-0060 or [email protected] or [email protected].
The investigation concerns whether Leggett & Platt and its board of directors violated the federal securities laws and/or breached their fiduciary duties by failing to: (1) obtain the best possible price for Leggett & Platt shareholders; (2) conduct a fair sales process free of any conflicts of interests; and (3) disclose all material information for Leggett & Platt shareholders to evaluate the transaction.
On behalf of shareholders, Halper Sadeh LLC may seek increased consideration, additional disclosures, or other relief and benefits.
Halper Sadeh LLC represents investors all over the world who have fallen victim to securities fraud and corporate misconduct. Our attorneys have been instrumental in implementing corporate reforms and recovering millions of dollars on behalf of defrauded investors.
Attorney Advertising. Prior results do not guarantee a similar outcome.
U.S. stocks were mixed, with the Dow Jones index falling over 200 points on Monday.
Shares of Leggett & Platt Inc (NYSE:LEG) rose sharply after the company announced it will be acquired by Somnigroup.
Diversified manufacturer Somnigroup International will acquire Leggett & Platt in an all-stock deal valued at approximately $2.5 billion, the companies announced.
Leggett & Platt shares jumped 12.5% to $11.24 on Monday.
Here are some other big stocks recording gains in today’s session.
Photo via Shutterstock
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Class Action Attorney Juan Monteverde with Monteverde & Associates PC (the “M&A Class Action Firm”), has recovered millions of dollars for shareholders and is recognized as a Top 50 Firm in the 2025 ISS Securities Class Action Services Report. The firm is headquartered at the Empire State Building in New York City and is investigating Leggett & Platt, Incorporated (NYSE: LEG) related to its sale to Somnigroup International Inc. Under the terms of the proposed transaction, Leggett & Platt shareholders will receive 0.1455 shares of Somnigroup common stock for each share of Leggett & Platt common stock. Is it a fair deal?
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MONTEVERDE & ASSOCIATES PC
The Empire State Building
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Attorney Advertising. (C) 2026 Monteverde & Associates PC. The law firm responsible for this advertisement is Monteverde & Associates PC (www.monteverdelaw.com). Prior results do not guarantee a similar outcome with respect to any future matter.
Somnigroup International to Acquire Leggett & Platt in $2.5 Billion All-Stock Deal
Somnigroup International SGI is seeing a modest increase in its stock price following the announcement of its acquisition of Leggett & Platt LEG , valued at approximately $2.5 billion. This all-stock transaction aligns with SGI's vertical integration strategy and aims to broaden its market presence in both bedding and non-bedding categories. The deal is projected to enhance earnings per share (EPS) immediately while creating significant synergies.
LEG shareholders will receive 0.1455 shares of SGI common stock for each LEG share owned, resulting in them holding about 9% of the combined entity on a fully diluted basis. SGI operates through Tempur Sealy, Mattress Firm, and Dreams, and the acquisition of LEG will provide a vital supply partner with engineered components, particularly in bedding, while expanding into adjacent markets. The merger is expected to yield approximately $50 million in annual run-rate adjusted EBITDA synergies, primarily through enhanced sourcing, operations, and product innovation. SGI anticipates realizing around $10 million of these benefits within the first year post-acquisition, with the full synergy potential being achieved over three years. This acquisition reinforces SGI's vertical integration strategy by incorporating a long-time supplier, which could enhance coordination among component engineering, mattress design, and consumer trends. On a pro forma basis, the combined entity is projected to generate approximately $11.2 billion in sales for 2025, with adjusted EBITDA of $1.7 billion and operating cash flow of $1.1 billion. SGI alone reported $7.48 billion in sales for FY25, reflecting a 51.6% year-over-year increase. Historically, this is not the first attempt by SGI to acquire LEG; an earlier proposal for an all-stock deal valued at $12 per share was made in December 2025 but did not result in a transaction. The strategic rationale remains consistent, as integrating a long-time supplier into SGI's operations should enhance coordination across various functions. While the expectation of immediate adjusted EPS accretion and substantial annual synergies likely contributed to the positive movement in SGI shares, there are concerns regarding execution and potential dilution due to the all-stock nature of the deal. Nevertheless, the established relationship between the companies may mitigate integration risks. It's important to note that while this acquisition adds some diversification, LEG's close ties to the bedding industry mean SGI will still be significantly influenced by the same market dynamics and broader bedding cycle.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
Dividend investors have watched reliable income streams come under pressure lately as inflation, softer demand, and balance-sheet strain force tough choices even at established payout growers. In 2024 alone, three former Dividend Kings — Walgreens Boots Alliance, Leggett & Platt (NYSE:LEG), and 3M (NYSE:MMM | MMM Price Prediction) slashed their dividends.
Walgreens later accepted a buyout from private-equity firm Sycamore Partners — completed last August –and now Leggett & Platt has taken a similar step: it agreed today to be acquired by Somnigroup International (NYSE:SGI) in a $2.5 billion all-stock transaction. The deal, announced this morning, lets Leggett shareholders trade their shares for 0.1455 shares of Somnigroup stock and own about 9% of the combined company.
What Separates Dividend Kings from the Pack A Dividend King earns its crown by raising its annual payout for at least 50 consecutive years. The bar is high because it demands steady cash flow, disciplined capital allocation, and a board committed to shareholders year after year. Leggett & Platt held that title with 52 straight years of increases before 2024. That streak signaled a company that consistently generated enough free cash to reward owners without overextending.
Simply put, though, the crown is no guarantee of permanence. High yields can mask trouble when earnings weaken. Leggett’s payout ratio had climbed above 128% heading into its cut, and when cash generation lags, even kings must choose between preserving the dividend or protecting the balance sheet. Investors learned this the hard way in 2024 when three longtime payers trimmed payouts to free up capital.
Why Leggett & Platt Cut Its Dividend Almost exactly two years ago, Leggett & Platt reported first-quarter sales of $1.1 billion, down 10% year-over-year, with adjusted EPS falling to $0.23 from $0.39. The board responded by slashing the quarterly dividend 89% — from $0.46 to $0.05 per share (where it stands today) — for Q2 2024. Full-year 2024 dividends dropped to $0.61 per share from $1.82 the prior year, as management directed the savings toward deleveraging; net debt stood at 3.61 times trailing adjusted EBITDA at the time.
That decision mirrored challenges at Walgreens Boots Alliance and 3M, where similar margin squeezes and debt loads forced cuts. Leggett’s 2024 trade sales totaled $4.384 billion, down from $4.725 billion in 2023. Bedding and furniture components — the heart of its business — faced weaker demand. The cut, though, freed roughly $110 million annually that had been earmarked for dividends, helping reduce net leverage to 2.4 times adjusted EBITDA by December 31, 2025.
The Somnigroup Buyout: Strategic Fit with Real Upside Today’s agreement pairs Leggett & Platt with its largest customer. Somnigroup, the world’s leading bedding company formed from Tempur Sealy International’s purchase of Mattress Firm, buys Leggett in an all-stock deal valued at $2.5 billion based on Somnigroup’s closing price on April 10. Shareholders receive 0.1455 Somnigroup shares per Leggett share on a tax-deferred basis. The combined entity projects 2025 net sales of $11.2 billion, adjusted EBITDA of $1.7 billion, and operating cash flow of $1.1 billion.
Somnigroup expects $50 million in annual run-rate cost synergies from sourcing, operations, and product innovation — $10 million in the first year — fully realized within three years. Leggett & Platt will operate as a separate business unit, preserving its 140-year track record of innovation while gaining vertical-integration benefits. Somnigroup already accounted for 7% of Leggett’s 2025 sales.
Key Takeaway Dividend Kings command respect, but 2024 proved the title alone does not protect payouts or stock prices. Leggett & Platt’s 89% cut and today’s buyout show how quickly conditions can change. However, shareholders now gain exposure to a larger, vertically integrated player with stronger cash flow and $50 million in identified synergies. The deal closes by the end of 2026.
Regardless of how you look at it, the clearest lesson is this: diversify income sources and watch payout ratios closely. Kings can lose their crowns, but smart investors can still turn the transition into an opportunity.
On April 13, 2026, Leggett & Platt Inc LEG shares rose 12.6% to a current price of $11.25, demonstrating a strong performance against its 52-week price range of $6.48 to $13.00. The recent surge reflects a positive momentum in the market, but the stock is currently trading above its GF Value™ estimate.
GF Value™ verdict: LEG is currently priced at $11.25, which is 1.7% overvalued compared to GF Value™ of $11.06.GF Score™ of 75/100 indicates that LEG is rated as above average, suggesting solid fundamentals.Notable signal: The stock has a momentum rank of 9/10, reflecting strong recent performance. Is LEG Overvalued or Undervalued? Leggett & Platt Inc is currently evaluated at $11.25, which is slightly above its GF Value™ estimate of $11.06. This implies that the stock is 1.7% overvalued at present. The GF Valuation label of "Fairly Valued" suggests that while there is not a significant margin of safety, the stock is also not excessively overpriced. Investors should be cautious as being overvalued can present risks, particularly in volatile markets where price corrections can occur.
GF Value™ is GuruFocus' proprietary measure of intrinsic value, calculated from historical trading multiples, past business growth, and future performance estimates. The current valuation indicates that investors may need to keep a close eye on market conditions and company performance before making significant investment decisions in LEG.
How Does LEG's Valuation Compare to Its History? Metric Current Historical P/E (TTM) 6.7x 14.0x (5-Year Median) Forward P/E 10.3x N/A The current P/E ratio of 6.7x is significantly below its 5-year median P/E of 14.0x, indicating that LEG is trading at a much lower valuation relative to its historical averages. This analysis supports the GF Value™ verdict, highlighting that while the stock is currently overvalued based on GF Value™, it presents a historically low P/E ratio which might suggest a potential opportunity if company fundamentals improve.
What Does LEG's GF Score™ Tell Us? Metric Rating GF Score™ 75 Financial Strength 6/10 Profitability 7/10 Growth 1/10 Valuation 10/10 Momentum 9/10 The GF Score™ of 75/100 indicates that LEG has above-average potential for long-term returns. The strongest aspects of the company include its Valuation rank of 10/10 and a high Momentum rank of 9/10, reflecting its recent price performance. However, the Growth rank of 1/10 suggests significant challenges in expanding revenue or earnings, which could limit future upside for the stock.
What Are Insiders Doing with LEG Stock? Currently, there have been no insider transactions reported for Leggett & Platt Inc in the last three months. The lack of insider buying or selling might suggest that insiders are either confident in the current pricing or are not taking active positions based on market conditions. This neutrality can sometimes indicate stability, but it may also mean that insiders are waiting for clearer signals before making any moves.
What This Means for Investors Based on the GF Value™ assessment, Leggett & Platt Inc is currently overvalued at $11.25 relative to its fair value estimate of $11.06. Investors may want to consider this valuation in conjunction with the company's historical performance and GF Score™ metrics before making any decisions.
For the complete analysis, visit the Leggett & Platt Inc LEG stock page. You can also explore the GF Value™ page for detailed valuation methodology, or use the GuruFocus Stock Screener to find similar opportunities.
Frequently Asked Questions What is LEG's GF Score™?
LEG's GF Score™ is 75/100, indicating that it has above-average fundamentals and potential for long-term returns.
Is LEG overvalued or undervalued?
LEG is currently overvalued, with a GF Value™ of $11.06 compared to its market price of $11.25.
What is LEG's P/E ratio?
LEG's P/E ratio is 6.7x, which is significantly below its 5-year median P/E of 14.0x, indicating a low valuation relative to its historical performance.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
NEW YORK & NEW ORLEANS--(BUSINESS WIRE)--Former Attorney General of Louisiana Charles C. Foti, Jr., Esq. and the law firm of Kahn Swick & Foti, LLC (“KSF”) are investigating the proposed sale of Leggett & Platt, Incorporated (NYSE: LEG) to Somnigroup International Inc. (NYSE: SGI). Under the terms of the proposed transaction, shareholders of Leggett will receive 0.1455 shares of Somnigroup common stock for each share of Leggett & Platt that they own. KSF is seeking to determine whether this consideration and the process that led to it are adequate, or whether the consideration undervalues the Company.
If you believe that this transaction undervalues the Company and/or if you would like to discuss your legal rights regarding the proposed sale, you may, without obligation or cost to you, e-mail or call KSF Managing Partner Lewis S. Kahn ([email protected]) toll free at any time at 855-768-1857, or visit https://www.ksfcounsel.com/cases/nyse-leg/ to learn more.
To learn more about KSF, whose partners include the Former Louisiana Attorney General, visit www.ksfcounsel.com.
Legget & Platt (LEG - Free Report) shares rallied 12.6% in the last trading session to close at $11.25. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 1.9% loss over the past four weeks.
Leggett & Platt's shares surged after it agreed to be acquired by Somnigroup International in an all-stock deal valued at about $2.5 billion, signaling a potential premium and strategic value unlock for shareholders. The rally also reflects optimism around synergies and improved growth prospects under combined operations, boosting investor sentiment.
This engineered component manufacturer is expected to post quarterly earnings of $0.26 per share in its upcoming report, which represents a year-over-year change of +8.3%. Revenues are expected to be $943.27 million, down 7.7% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Legget & Platt, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on LEG going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Legget & Platt belongs to the Zacks Furniture industry. Another stock from the same industry, Flexsteel Industries (FLXS - Free Report) , closed the last trading session 3.7% higher at $50.27. Over the past month, FLXS has returned 6.9%.
For Flexsteel, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.8. This represents a change of -29.2% from what the company reported a year ago. Flexsteel currently has a Zacks Rank of #3 (Hold).
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Leggett & Platt (LEG - Free Report) is a stock many investors are watching right now. LEG is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. LEG has a P/S ratio of 0.39. This compares to its industry's average P/S of 0.4.
Finally, investors should note that LEG has a P/CF ratio of 4.78. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. LEG's P/CF compares to its industry's average P/CF of 7.42. Over the past year, LEG's P/CF has been as high as 61.65 and as low as 3.05, with a median of 4.80.
Value investors will likely look at more than just these metrics, but the above data helps show that Leggett & Platt is likely undervalued currently. And when considering the strength of its earnings outlook, LEG sticks out as one of the market's strongest value stocks.
Insiders may stand to receive substantial financial benefits not available to ordinary shareholders.
The proposed transactions may contain terms that could limit superior competing offers.
Shareholders are encouraged to contact the firm to discuss their rights and options at no cost or obligation. We would handle any matter on a contingent fee basis, whereby you would not be responsible for out-of-pocket payment of our legal fees or expenses.
NEW YORK, April 22, 2026 (GLOBE NEWSWIRE) -- Halper Sadeh LLC, an investor rights law firm, is investigating the following companies for potential violations of the federal securities laws and/or breaches of fiduciary duties to shareholders relating to:
Leggett & Platt, Incorporated (NYSE: LEG)’s sale to Somnigroup International Inc. for 0.1455 shares of Somnigroup common stock for each share of Leggett & Platt common stock. Upon closing of the proposed transaction, Leggett & Platt shareholders will own approximately 9% of the combined company. If you are a Leggett & Platt shareholder, click here to learn more about your legal rights and options.
Avanos Medical, Inc. (NYSE: AVNS)’s sale to affiliates of American Industrial Partners for $25.00 per share in cash. If you are an Avanos shareholder, click here to learn more about your rights and options.
Select Medical Holdings Corporation (NYSE: SEM)’s sale to a consortium led by Select Medical executives and directors for $16.50 in cash per share. If you are a Select Medical shareholder, click here to learn more about your rights and options.
Galera Therapeutics, Inc. (OTC: GRTX)’s merger with Obsidian Therapeutics, Inc. Upon closing of the proposed transaction, Galera shareholders are expected to own approximately 1.8% of the combined company. If you are a Galera shareholder, click here to learn more about your rights and options.
On behalf of shareholders, Halper Sadeh LLC may seek increased consideration, additional disclosures and information, or other relief and benefits.
Halper Sadeh LLC represents investors all over the world who have fallen victim to securities fraud and corporate misconduct. Our attorneys have been instrumental in implementing corporate reforms and recovering millions of dollars on behalf of defrauded investors.
Attorney Advertising. Prior results do not guarantee a similar outcome.
Contact Information:
Halper Sadeh LLC
Daniel Sadeh, Esq.
Zachary Halper, Esq.
One World Trade Center
85th Floor
New York, NY 10007
(212) 763-0060 [email protected] [email protected]
https://www.halpersadeh.com
April 23, 2026 09:00 ET | Source: Leggett & Platt, Incorporated
Carthage, MO, April 23, 2026 (GLOBE NEWSWIRE) -- Leggett & Platt (NYSE:LEG), a diversified manufacturer of engineered products serving several major markets, will release first quarter earnings results on Thursday, May 7, 2026 before the market opens.
The Company will not host a call in connection with the earnings release.
The earnings release will be available on the Investor Relations section of our website.
COMPANY DESCRIPTION: Leggett & Platt (NYSE: LEG) is a diversified manufacturer that designs and produces a broad variety of engineered components and products that can be found in many homes and automobiles. The 143-year-old Company is a leading supplier of bedding components and solutions; automotive seat comfort and convenience systems; home and work furniture components; geo components; flooring underlayment; hydraulic cylinders for material handling and heavy construction applications.
INVESTOR CONTACTS:
Ryan Kleiboeker, Executive Vice President
(417) 358-8131 [email protected]
Insiders may stand to receive substantial financial benefits not available to ordinary shareholders.
The proposed transactions may contain terms that could limit superior competing offers.
Shareholders are encouraged to contact the firm to discuss their rights and options at no cost or obligation. We would handle any matter on a contingent fee basis, whereby you would not be responsible for out-of-pocket payment of our legal fees or expenses.
, /PRNewswire/ -- Halper Sadeh LLC, an investor rights law firm, is investigating the following companies for potential violations of the federal securities laws and/or breaches of fiduciary duties to shareholders relating to:
Leggett & Platt, Incorporated (NYSE: LEG)'s sale to Somnigroup International Inc. for 0.1455 shares of Somnigroup common stock for each share of Leggett & Platt common stock. Upon closing of the proposed transaction, Leggett & Platt shareholders will own approximately 9% of the combined company. If you are a Leggett & Platt shareholder, click here to learn more about your legal rights and options.
Select Medical Holdings Corporation (NYSE: SEM)'s sale to a consortium led by Select Medical executives and directors for $16.50 in cash per share. If you are a Select Medical shareholder, click here to learn more about your rights and options.
KORE Group Holdings, Inc. (NYSE: KORE)'s sale to Searchlight Capital Partners, L.P. and Abry Partners for $9.25 per share. If you are a KORE shareholder, click here to learn more about your rights and options.
Forian Inc. (NASDAQ: FORA)'s sale to a consortium of investors led by Max Wygod, Chairman and Chief Executive Officer, together with certain other senior executives and existing shareholders of the Company, for $2.17 per share in cash. If you are a Forian shareholder, click here to learn more about your rights and options.
On behalf of shareholders, Halper Sadeh LLC may seek increased consideration, additional disclosures and information, or other relief and benefits.
Halper Sadeh LLC represents investors all over the world who have fallen victim to securities fraud and corporate misconduct. Our attorneys have been instrumental in implementing corporate reforms and recovering millions of dollars on behalf of defrauded investors.
Attorney Advertising. Prior results do not guarantee a similar outcome.
Contact Information:
Halper Sadeh LLC
Daniel Sadeh, Esq.
Zachary Halper, Esq.
One World Trade Center
85th Floor
New York, NY 10007
(212) 763-0060
[email protected]
[email protected]
https://www.halpersadeh.com
1Q sales of $918 million, a 10% decrease vs 1Q25, including a 5% decrease from divestitures 1Q EPS of $.14, 1Q adjusted1 EPS of $.15, a $.09 decrease vs adjusted1 1Q25 EPS Withdrawing previously issued 2026 guidance due to the pending acquisition by Somnigroup International President and CEO Karl Glassman commented, "In aggregate, first quarter sales were in line with our expectations, and restructuring actions implemented over the past two years continued to deliver EBIT benefits, reflecting continued progress in structurally improving our earnings profile.
"At the same time, first quarter results reflected lower market demand across most of our businesses compared to the prior year, particularly in residential end markets. Demand in our domestic bedding business was lower than anticipated, as the overall health of the U.S. industry remains challenged across both manufacturers and retailers due to continued weakness in consumer activity. Market conditions were stable early in the quarter, and the President's Day promotional period generally met expectations. As the quarter progressed, however, weather-related closures, economic uncertainty, and lower consumer sentiment driven by the war in Iran weighed on demand. As a result, we believe the U.S. mattress market declined by high single to low double digits in the first quarter.
"In addition to weak demand, our teams navigated a dynamic global environment related to the war in Iran, which drove higher transportation costs and increased transit times late in the quarter, as well as higher chemical prices that will begin to impact our costs in the second quarter. The combination of lower volume and continued cost pressures – most notably in our Furniture, Flooring & Textile Products segment – resulted in lower margins. We are mitigating these pressures through product and sourcing actions and by passing through price increases where appropriate.
"Despite these macroeconomic challenges and disruptions, we remain focused on our long-term priorities. As previously announced, we signed a merger agreement with Somnigroup, a valued long–standing customer and partner, that provides Leggett & Platt shareholders with an opportunity to participate in the future growth and value creation of a leading global company. For more than 140 years, Leggett & Platt has been defined by innovation, quality, and strong customer partnerships. We believe this combination positions us well to continue delivering compelling strategic and financial value for our customers, employees and shareholders."
FIRST QUARTER RESULTS
First quarter sales were $918 million, a 10% decrease versus first quarter last year
2025 divestitures decreased sales 5% Organic sales2 were down 5% Volume was down 9%, primarily from continued weak demand across most of our end markets and retailer merchandising changes in Adjustable Bed Raw material-related selling price increases added 2% to sales Currency benefit increased sales 2% First quarter EBIT was $45 million, down from $63 million in first quarter 2025. Adjusted1 EBIT was $43 million, down from first quarter 2025 adjusted1 EBIT of $67 million.
Adjusted1 EBIT decreased primarily from lower volume, earnings associated with the divested Aerospace business, and continued margin compression in our Flooring business driven by higher costs combined with pricing pressure resulting from the soft demand environment, partially offset by metal margin expansion in trade rod. Additionally, higher stock-based compensation expense and an increase in bad debt reserves related to Bedding customers contributed to the year-over-year decline. EBIT margin was 4.8%, down from 6.2% in the first quarter of 2025, and adjusted1 EBIT margin was 4.7%, down from 6.5%.
First quarter EPS was $.14, an $.08 decrease versus first quarter 2025 EPS of $.22. First quarter adjusted1 EPS was $.15, down $.09 versus first quarter 2025 adjusted1 EPS of $.24.
First Quarter Results 1
EBIT (millions)
EPS
Bedding
Specialized
FF&T
Other
Total
1Q26
1Q25
1Q26
1Q25
1Q26
1Q25
1Q26
1Q25
1Q26
1Q25
1Q26
1Q25
Reported results
$26
$10
$18
$28
$4
$25
($3)
$—
$45
$63
$.14
$.22
Adjustment items:
Gain on sale of real
estate
(10)
—
—
—
—
(3)
—
—
(10)
(3)
(.05)
(.02)
Restructuring,
restructuring-related, and
impairment charges
5
3
—
3
<1
—
—
—
5
7
.03
.04
Somnigroup merger costs
—
—
—
—
—
—
4
—
4
—
.03
—
Total adjustments
(5)
3
—
3
<1
(3)
4
—
(1)
4
.01
.02
Adjusted results
$21
$13
$18
$32
$5
$22
<$1
$—
$43
$67
$.15
$.24
1 Calculations impacted by rounding
DEBT AND CASH FLOW
Net Debt1 was 2.8x trailing 12-month adjusted EBITDA1 Debt at March 31 Total debt of $1.5 billion in three tranches of long-term bonds at $500 million each Operating cash flow was negative $56 million in the first quarter, a decrease of $63 million versus first quarter 2025, reflecting an expected larger use of working capital and lower earnings Capital expenditures were $24 million Dividends were $7 million In February, Leggett & Platt's Board of Directors declared a first quarter dividend of $.05 per share, flat versus last year's first quarter dividend SEGMENT RESULTS – First Quarter 2026 (versus 1Q 2025)
Bedding Products –
Trade sales decreased 7% Volume decreased 12%, primarily due to retailer merchandising changes in Adjustable Bed, volume softness in Specialty Foam, and the decision during the fourth quarter to walk away from a financially challenged customer in U.S. Spring. These declines were partially offset by higher trade rod and wire sales. Raw material-related selling price increases and currency benefit added 6% to sales 2025 divestiture of a small U.S. machinery business reduced sales 1% EBIT increased $16 million and adjusted1 EBIT increased $8 million Adjusted1 EBIT increased primarily from metal margin expansion in trade rod and restructuring benefit partially offset by lower volume We believe the U.S. mattress market was down high single to low double digits and domestic production was down high single digits in the first quarter Specialized Products –
Trade sales decreased 19% 2025 divestiture of Aerospace reduced sales 17% Volume decreased 5% from lower market demand Raw material-related selling price increases added 1% to sales Currency benefit increased sales 2% EBIT decreased $11 million and adjusted1 EBIT decreased $14 million Adjusted1 EBIT decreased primarily from earnings associated with the divested Aerospace business and lower volume Automotive volume outperformed major market production by ~1% in the quarter Furniture, Flooring & Textile Products –
Trade sales decreased 7% Volume decreased 7% from declines in Home Furniture, Flooring, and Textiles partially offset by growth in Work Furniture Raw material-related selling price increases and currency benefit increased sales 1% 2025 divestiture of a small facility in Work Furniture reduced sales 1% EBIT decreased $20 million and adjusted1 EBIT decreased $17 million Adjusted1 EBIT decreased primarily from lower volume impacts, margin compression in our Flooring business, currency impact, and start-up costs associated with a new Home Furniture facility in Vietnam 2026 GUIDANCE AND CONFERENCE CALL
On April 13, 2026, the Company entered into an agreement to be acquired by Somnigroup International Inc. (NYSE: SGI). The transaction is anticipated to close by year-end 2026, subject to customary closing conditions, including approval by Leggett & Platt's shareholders and receipt of applicable regulatory approvals. As is customary while a transaction is pending, Leggett & Platt's previously issued guidance for 2026 is not being updated in conjunction with this quarter's earnings release and should no longer be relied upon. Additionally, Leggett & Platt will not host a conference call. For further details on quarterly performance, please refer to Leggett & Platt's Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, which is expected to be filed today with the Securities and Exchange Commission.
1 Please refer to attached tables for Non-GAAP Reconciliations
2 Trade sales excluding acquisitions/divestitures in the last 12 months
FOR MORE INFORMATION: Visit Leggett's website at www.leggett.com.
COMPANY DESCRIPTION: Leggett & Platt (NYSE: LEG) is a diversified manufacturer that designs and produces a broad variety of engineered components and products that can be found in many homes and automobiles. The 143-year-old Company is a leading supplier of bedding components and solutions; automotive seat comfort and convenience systems; home and work furniture components; geo components; flooring underlayment; and hydraulic cylinders for material handling and heavy construction applications.
FORWARD-LOOKING STATEMENTS: This press release contains "forward-looking statements," identified by words such as "expect," "anticipate," "estimate," or by the context in which they appear, including, but not limited to, the health of the U.S. bedding industry, consumer activity, EBIT benefit from restructuring activities, future growth and value creation as well as the delivery of compelling strategic and financial value for customers, employees and shareholders associated with the Somnigroup Merger (as defined below), and the closing of the Somnigroup Merger by year-end 2026 subject to customary closing conditions. Such statements are expressly qualified by cautionary statements described in this provision and reflect only the beliefs, expectations, and assumptions of Leggett at the time the statement is made. Because all forward-looking statements deal with the future, they are subject to risks, uncertainties and developments which might cause actual events or results to differ materially from those envisioned or reflected in any forward-looking statement. Moreover, we do not have, and do not undertake, any duty to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement was made. Some of these risks include: risks associated with the Agreement and Plan of Merger, dated April 13, 2026 (as may be amended from time to time, the "Somnigroup Merger Agreement"), by and among Somnigroup International Inc. ("Somnigroup"), Sparrow Unity Corporation, a Missouri corporation and a direct, wholly owned subsidiary of Somnigroup ("Merger Sub") and Leggett, pursuant to which, subject to the terms and conditions of the Somnigroup Merger Agreement, Merger Sub will merge with and into Leggett (the "Somnigroup Merger"), with Leggett surviving the Somnigroup Merger as a direct, wholly owned subsidiary of Somnigroup, including (i) Leggett's shareholders inability to determine the value of consideration to be received in a completed Somnigroup Merger because the exchange ratio is fixed and the market price of Somnigroup common stock will fluctuate; (ii) the completion of the Somnigroup Merger is subject to certain conditions that may not be satisfied or waived, including Leggett shareholder approval and certain governmental and regulatory approvals; (iii) an event, change or other circumstance could give rise to delays in completing the Somnigroup Merger or the termination of the Somnigroup Merger Agreement; (iv) Leggett's business relationships may be subject to disruption due to uncertainty associated with the Somnigroup Merger; (v) the diversion of management time from ongoing business operations and opportunities as a result of the Somnigroup Merger; (vi) failure to complete the Somnigroup Merger could negatively impact the share price and the future business and financial results of Leggett; (vii) potential litigation against the Company could result in substantial costs, an injunction preventing the completion of the Somnigroup Merger and/or a judgment resulting in the payment of damages; (viii) the Company will incur significant transaction and merger-related costs in connection with the Somnigroup Merger; and (ix) the possibility that the expected benefits of the Somnigroup Merger are not realized when expected or at all; impacts of the Iranian war; increased trade costs, including tariffs; regarding the 2024 and 2026 Restructuring Plans, our ability to timely receive anticipated EBIT benefits, and expected net cash from real estate sales, our ability to accurately forecast sales and earnings; the adverse impact on our sales, earnings, liquidity, margins, cash flow, costs, and financial condition caused by: global inflationary and deflationary impacts; the demand for our products and our customers' products; our manufacturing facilities' ability to obtain necessary raw materials, parts, and labor, and to ship finished products; the impairment of goodwill and long-lived assets; our ability to access the commercial paper market or borrow under our credit facility; supply chain shortages and disruptions; our ability to manage working capital; our ability to collect receivables; price and product competition; cost of raw materials, labor and energy; cash generation sufficient to pay our debts or the dividend; cash repatriation from foreign accounts; our ability to pass along cost increases through increased selling prices; conflict between China and Taiwan; our ability to maintain profit margins if customers change the quantity or mix of our products; political risks; tax audits and rates; foreign operating risks; cybersecurity incidents; customer losses and insolvencies; disruption to our steel rod mill and wire mills and other operations because of severe weather-related events, natural disaster, fire, explosion, terrorism, or governmental action; ability to develop innovative products; foreign currency fluctuation; anti-dumping duties on innersprings, steel wire rod and mattresses; data privacy; sustainability obligations; litigation risks; and risk factors in the "Forward-Looking Statements" and "Risk Factors" sections in Leggett's Form 10-K and subsequent Form 10-Qs. There may be other factors that may cause Leggett's actual results to differ materially from the forward-looking statements. Leggett does not undertake any obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
INVESTOR CONTACT: Investor Relations
Ryan M. Kleiboeker, Executive Vice President
(417) 358-8131 or [email protected]
LEGGETT & PLATT
Page 5 of 7
May 7, 2026
RESULTS OF OPERATIONS
FIRST QUARTER
(In millions, except per share data)
2026
2025
Change
Trade sales
$ 918.2
$ 1,022.1
(10) %
Cost of goods sold
747.5
832.1
Gross profit
170.7
190.0
(10) %
Selling & administrative expenses
121.5
123.6
(2) %
Amortization
3.6
5.0
Other (income) expense, net
1.1
(1.5)
Earnings before interest and income taxes
44.5
62.9
(29) %
Net interest expense
12.6
17.8
Earnings before income taxes
31.9
45.1
Income taxes
11.9
14.5
Net earnings
20.0
30.6
Less net income from noncontrolling interest
—
—
Net Earnings (loss) Attributable to L&P
$ 20.0
$ 30.6
(35) %
Earnings (loss) per diluted share
Net earnings (loss) per diluted share
$ 0.14
$ 0.22
(36) %
Shares outstanding
Common stock (at end of period)
136.4
135.1
1.0 %
Basic (average for period)
139.3
137.8
Diluted (average for period)
141.0
138.6
1.7 %
CASH FLOW
FIRST QUARTER
(In millions)
2026
2025
Change
Net earnings
$ 20.0
$ 30.6
Depreciation and amortization
28.2
31.6
Working capital decrease (increase)
(118.2)
(64.2)
Impairments
2.8
0.3
Other operating activities
11.1
8.5
Net Cash from Operating Activities
$ (56.1)
$ 6.8
NM
Additions to PP&E
(24.3)
(13.3)
Proceeds from disposals of assets and businesses
14.3
5.6
Dividends paid
(6.8)
(6.7)
Repurchase of common stock, net
(3.4)
(2.0)
Additions (payments of) to debt, net
0.3
69.0
Other
(0.9)
3.0
Increase (Decrease) in Cash & Equivalents
$ (76.9)
$ 62.4
BALANCE SHEET
Mar 31,
Dec 31,
(In millions)
2026
2025
Change
Cash and equivalents
$ 510.5
$ 587.4
Receivables
520.2
475.9
Inventories
663.3
622.6
Other current assets
53.0
57.7
Total current assets
1,747.0
1,743.6
0 %
Net fixed assets
658.4
664.0
Operating lease right-of-use assets
129.9
137.9
Goodwill
747.6
751.4
Intangible assets and deferred costs, both at net
236.2
239.5
TOTAL ASSETS
$ 3,519.1
$ 3,536.4
— %
Trade accounts payable
$ 467.9
$ 466.6
Current debt maturities
1.6
1.5
Current operating lease liabilities
50.0
51.5
Other current liabilities
229.2
255.4
Total current liabilities
748.7
775.0
(3) %
Long-term debt
1,496.6
1,496.2
0 %
Operating lease liabilities
99.7
106.7
Deferred taxes and other liabilities
134.4
135.9
Equity
1,039.7
1,022.6
2 %
Total Capitalization
2,770.4
2,761.4
0 %
TOTAL LIABILITIES & EQUITY
$ 3,519.1
$ 3,536.4
— %
LEGGETT & PLATT
Page 6 of 7
May 7, 2026
SEGMENT RESULTS 1
FIRST QUARTER
(In millions)
2026
2025
Change
Bedding Products
Trade sales
$ 364.9
$ 390.7
(7) %
EBIT
25.7
9.6
168 %
EBIT margin
7.0 %
2.5 %
450 bps
2
Restructuring, restructuring-related, and impairment charges
4.7
3.4
Gain on sale of real estate
(9.5)
—
Adjusted EBIT 3
20.9
13.0
61 %
Adjusted EBIT margin 3
5.7 %
3.3 %
240 bps
Depreciation and amortization
12.4
13.0
Adjusted EBITDA
33.3
26.0
28 %
Adjusted EBITDA margin
9.1 %
6.7 %
240 bps
Specialized Products
Trade sales
$ 244.1
$ 300.1
(19) %
EBIT
17.7
28.4
(38) %
EBIT margin
7.3 %
9.5 %
(220) bps
Restructuring, restructuring-related, and impairment charges
—
3.4
Adjusted EBIT 3
17.7
31.8
(44) %
Adjusted EBIT margin 3
7.3 %
10.6 %
(330) bps
Depreciation and amortization
8.1
10.4
Adjusted EBITDA
25.8
42.2
(39) %
Adjusted EBITDA margin
10.6 %
14.1 %
(350) bps
Furniture, Flooring & Textile Products
Trade sales
$ 309.2
$ 331.3
(7) %
EBIT
4.4
24.8
(82) %
EBIT margin
1.4 %
7.5 %
(610) bps
Restructuring, restructuring-related, and impairment charges
0.2
0.1
Gain on sale of real estate
—
(3.2)
Adjusted EBIT 3
4.6
21.7
(79) %
Adjusted EBIT margin 3
1.5 %
6.5 %
(500) bps
Depreciation and amortization
4.3
4.9
Adjusted EBITDA
8.9
26.6
(67) %
Adjusted EBITDA margin
2.9 %
8.0 %
(510) bps
Total Company
Trade sales
$ 918.2
$ 1,022.1
(10) %
EBIT - segments
47.8
62.8
(24) %
Intersegment eliminations and other
(3.3)
0.1
EBIT
44.5
62.9
(29) %
EBIT margin
4.8 %
6.2 %
(140) bps
Restructuring, restructuring-related, and impairment charges
4.9
6.9
Gain on sale of real estate
(9.5)
(3.2)
Somnigroup merger costs
3.5
—
Adjusted EBIT 3
43.4
66.6
(35) %
Adjusted EBIT margin 3
4.7 %
6.5 %
(180) bps
Depreciation and amortization - segments
24.8
28.3
Depreciation and amortization - unallocated 4
3.4
3.3
Adjusted EBITDA
$ 71.6
$ 98.2
(27) %
Adjusted EBITDA margin
7.8 %
9.6 %
(180) bps
LAST SIX QUARTERS
2024
2025
2026
Selected Figures (In Millions)
4Q
1Q
2Q
3Q
4Q
1Q
Trade sales
1,056.4
1,022.1
1,058.0
1,036.4
938.6
918.2
Sales growth (vs. prior year)
(5) %
(7) %
(6) %
(6) %
(11) %
(10) %
Volume growth (same locations vs. prior year)
(4) %
(5) %
(7) %
(6) %
(9) %
(9) %
Adjusted EBIT 3
55.6
66.6
75.6
72.8
47.9
43.4
Cash from operations
122.3
6.8
84.0
125.9
121.5
(56.1)
Adjusted EBITDA (trailing twelve months) 3
402.5
404.1
405.6
395.4
385.3
358.7
(Long-term debt + current maturities - cash and equivalents) / adj. EBITDA 3,5
3.76
3.77
3.51
2.62
2.36
2.75
Organic Sales (Vs. Prior Year) 6
4Q
1Q
2Q
3Q
4Q
1Q
Bedding Products
(6) %
(12) %
(10) %
(9) %
(10) %
(6) %
Specialized Products
(5) %
(5) %
(5) %
(2) %
(4) %
(2) %
Furniture, Flooring & Textile Products
(4) %
(1) %
(2) %
— %
(2) %
(6) %
Overall
(5) %
(7) %
(6) %
(4) %
(6) %
(5) %
1 Segment and overall company margins calculated on net trade sales.
2 bps = basis points; a unit of measure equal to 1/100th of 1%.
3 Refer to next page for non-GAAP reconciliations.
4 Consists primarily of depreciation of non-operating assets.
5 EBITDA based on trailing twelve months.
6 Trade sales excluding sales attributable to acquisitions and divestitures consummated in the last 12 months.
LEGGETT & PLATT
Page 7 of 7
May 7, 2026
RECONCILIATION OF REPORTED (GAAP) TO ADJUSTED (Non-GAAP) FINANCIAL MEASURES 10
Non-GAAP Adjustments 7
2024
2025
2026
(In millions, except per share data)
4Q
1Q
2Q
3Q
4Q
1Q
Goodwill impairment
0.7
—
—
—
—
—
Gain on sale of Aerospace Products Group
—
—
—
(86.8)
(4.1)
—
Restructuring, restructuring-related, and impairment charges
15.5
6.9
3.6
4.1
21.6
4.9
Gain on sale of real estate
(4.3)
(3.2)
(18.4)
(2.5)
(5.0)
(9.5)
Net gain from insurance proceeds
—
—
—
(13.1)
(21.6)
—
Pension settlement
—
—
—
—
22.0
—
Somnigroup merger costs
—
—
—
—
3.4
3.5
Non-GAAP Adjustments (Pretax) 8
11.9
3.7
(14.8)
(98.3)
16.3
(1.1)
Income tax impact
(2.7)
(1.3)
3.6
9.0
(10.0)
1.9
Special tax item 9
5.4
—
—
2.3
—
—
Non-GAAP Adjustments (After Tax)
14.6
2.4
(11.2)
(87.0)
6.3
0.8
Diluted shares outstanding
138.2
138.6
139.6
140.2
140.4
141.0
EPS Impact of Non-GAAP Adjustments
0.11
0.02
(0.08)
(0.62)
0.04
0.01
Adjusted EBIT, EBITDA, Margin, and EPS 7
2024
2025
2026
(In millions, except per share data)
4Q
1Q
2Q
3Q
4Q
1Q
Trade sales
1,056.4
1,022.1
1,058.0
1,036.4
938.6
918.2
EBIT (earnings before interest and taxes)
43.7
62.9
90.4
171.1
31.6
44.5
Non-GAAP adjustments (pretax)
11.9
3.7
(14.8)
(98.3)
16.3
(1.1)
Adjusted EBIT
55.6
66.6
75.6
72.8
47.9
43.4
EBIT margin
4.1 %
6.2 %
8.5 %
16.5 %
3.4 %
4.8 %
Adjusted EBIT Margin
5.3 %
6.5 %
7.1 %
7.0 %
5.1 %
4.7 %
EBIT
43.7
62.9
90.4
171.1
31.6
44.5
Depreciation and amortization
34.1
31.6
29.7
29.4
31.7
28.2
EBITDA
77.8
94.5
120.1
200.5
63.3
72.7
Non-GAAP adjustments (pretax)
11.9
3.7
(14.8)
(98.3)
16.3
(1.1)
Adjusted EBITDA
89.7
98.2
105.3
102.2
79.6
71.6
EBITDA margin
7.4 %
9.2 %
11.4 %
19.3 %
6.7 %
7.9 %
Adjusted EBITDA Margin
8.5 %
9.6 %
10.0 %
9.9 %
8.5 %
7.8 %
Diluted EPS
0.10
0.22
0.38
0.91
0.18
0.14
EPS impact of non-GAAP adjustments
0.11
0.02
(0.08)
(0.62)
0.04
0.01
Adjusted EPS
0.21
0.24
0.30
0.29
0.22
0.15
Net Debt to Adjusted EBITDA 11
2024
2025
2026
(In millions, except ratios)
4Q
1Q
2Q
3Q
4Q
1Q
Total debt
1,864.1
1,936.4
1,793.5
1,497.2
1,497.7
1,498.2
Less: cash and equivalents
(350.2)
(412.6)
(368.8)
(460.7)
(587.4)
(510.5)
Net debt
1,513.9
1,523.8
1,424.7
1,036.5
910.3
987.7
Adjusted EBITDA, trailing 12 months
402.5
404.1
405.6
395.4
385.3
358.7
Net Debt / 12-month Adjusted EBITDA
3.76
3.77
3.51
2.62
2.36
2.75
Aerospace Products Group
2024
2025
2026
(In millions)
4Q
1Q
2Q
3Q
4Q
1Q
Net trade sales
52.2
53.0
50.6
28.6
—
—
EBIT
7.9
7.2
9.3
3.2
—
—
Depreciation and amortization
2.6
2.5
—
—
—
—
Net Earnings (assuming a 25% tax rate)
5.9
5.4
7.0
2.4
—
—
7 Management and investors use these measures as supplemental information to assess operational performance.
8 The non-GAAP adjustments are included in the following lines of the income statement:
2024
2025
2026
4Q
1Q
2Q
3Q
4Q
1Q
Cost of goods sold
8.7
0.5
—
1.7
1.4
1.2
Selling & administrative expenses
4.5
1.7
—
—
3.6
3.5
Other (income) expense, net
(1.3)
1.5
(14.8)
(100.0)
11.3
(5.8)
Total Non-GAAP Adjustments (Pretax)
11.9
3.7
(14.8)
(98.3)
16.3
(1.1)
9 The special tax item of $2.3 in Q3 2025 is related to recent U.S. corporate income tax law changes, and the $5.4 in Q4 2024 is the deferred tax asset valuation allowance related to a 2022 acquisition in the Specialized Products segment.
10 Calculations impacted by rounding.
11 Management and investors use this ratio as supplemental information to assess ability to pay off debt. These ratios are calculated differently than the Company's credit
facility covenant ratio.
Legget & Platt (LEG - Free Report) came out with quarterly earnings of $0.15 per share, missing the Zacks Consensus Estimate of $0.26 per share. This compares to earnings of $0.24 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of -42.31%. A quarter ago, it was expected that this engineered component manufacturer would post earnings of $0.22 per share when it actually produced earnings of $0.22, delivering no surprise.
Over the last four quarters, the company has surpassed consensus EPS estimates just once.
Legget & Platt, which belongs to the Zacks Furniture industry, posted revenues of $918.2 million for the quarter ended March 2026, missing the Zacks Consensus Estimate by 2.66%. This compares to year-ago revenues of $1.02 billion. The company has topped consensus revenue estimates two times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Legget & Platt shares have added about 3.4% since the beginning of the year versus the S&P 500's gain of 7.6%.
What's Next for Legget & Platt?While Legget & Platt has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Legget & Platt was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.31 on $992.3 million in revenues for the coming quarter and $1.08 on $3.89 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Furniture is currently in the bottom 18% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Another stock from the broader Zacks Consumer Discretionary sector, Monro Muffler Brake (MNRO - Free Report) , has yet to report results for the quarter ended March 2026.
This automotive repair chain is expected to post quarterly loss of $0.04 per share in its upcoming report, which represents a year-over-year change of +55.6%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.
Monro Muffler Brake's revenues are expected to be $280.54 million, down 4.9% from the year-ago quarter.
Legget & Platt (LEG - Free Report) reported $918.2 million in revenue for the quarter ended March 2026, representing a year-over-year decline of 10.2%. EPS of $0.15 for the same period compares to $0.24 a year ago.
The reported revenue represents a surprise of -2.66% over the Zacks Consensus Estimate of $943.27 million. With the consensus EPS estimate being $0.26, the EPS surprise was -42.31%.
While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.
As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.
Here is how Legget & Platt performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:
Trade sales- Furniture, Flooring and Textile Products: $309.2 million versus $328.53 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a -6.7% change.Trade sales- Specialized Products: $244.1 million compared to the $245.86 million average estimate based on three analysts. The reported number represents a change of -18.7% year over year.Trade sales- Bedding Products: $364.9 million versus $368.89 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a -6.6% change.EBIT- Bedding Products: $25.7 million versus $19.55 million estimated by two analysts on average.EBIT- Furniture, Flooring and Textile Products: $4.4 million versus the two-analyst average estimate of $19.95 million.EBIT- Specialized Products: $17.7 million versus the two-analyst average estimate of $20.56 million.View all Key Company Metrics for Legget & Platt here>>>
Shares of Legget & Platt have returned +14.3% over the past month versus the Zacks S&P 500 composite's +11.4% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.
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CARTHAGE, Mo., May 21, 2026 /PRNewswire/ --
Board declared second quarter dividend of $.05 per share Annual meeting voting aligned with Board recommendations Leggett & Platt's Board of Directors declared a dividend of $.05 per share for the second quarter 2026. The dividend will be paid on July 15, 2026 to shareholders of record on June 15, 2026.
The Company's annual meeting of shareholders was held this morning. Shareholders elected as directors the eight nominees proposed by the Board; ratified the selection of PricewaterhouseCoopers as the Company's independent registered public accountant for 2026; endorsed the compensation of the Company's named executive officers; and approved the amendment and restatement of the Company's Flexible Stock Plan. No other proposals were voted upon.
FOR MORE INFORMATION: Visit Leggett's website at www.leggett.com.
COMPANY DESCRIPTION: Leggett & Platt (NYSE: LEG) is a diversified manufacturer that designs and produces a broad variety of engineered components and products that can be found in many homes and automobiles. The 143-year-old Company is a leading supplier of bedding components and solutions; automotive seat comfort and convenience systems; home and work furniture components; geo components; flooring underlayment; and hydraulic cylinders for material handling and heavy construction applications.
CONTACT:
Investor Relations, (417) 358-8131 or [email protected]
Investors in Leggett & Platt, Incorporated (LEG - Free Report) need to pay close attention to the stock based on moves in the options market lately. That is because the June 18, 2026 $05.00 Call had some of the highest implied volatility of all equity options today.
What is Implied Volatility?Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?Clearly, options traders are pricing in a big move for Leggett & Platt share, but what is the fundamental picture for the company? Currently, Leggett & Platt is a Zacks Rank #5 (Strong Sell) in the Furniture Industry that ranks in the Bottom 8% of our Zacks Industry Rank. Over the last 60 days, no analyst has increased his estimate for the current quarter, while three have revised their estimates downward. The net effect has taken our Zacks Consensus Estimate for the current quarter to move from 31 cents per share to 29 cents per share in the same time period.
Given the way analysts feel about Leggett & Platt right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
ACCELERATES INNOVATION & GROWTH IN COMFORT, MOTION & SOFTWARE INTEGRATED SYSTEMS
DETROIT, MI / ACCESS Newswire / June 10, 2026 / Leggett & Platt Automotive today announced the launch of its new brand identity, "Leggett Dynamics", and tagline "eMotion & Comfort for everyone, everywhere, every day" signaling a strategic shift to accelerate innovation and growth in comfort and motion systems for automotive, adjacent and diversified markets.
Megatrend & Consumer Shifts
"Leggett Dynamics creates experiences where comfort and motion feel effortless, intelligent, personalized and instinctive across all aspects of life. This positions us well in the market in terms of megatrends as well as anticipating and proactively innovating for future expectations," said Marinela Cirstea, President of Leggett Dynamics.
According to Cirstea, comfort and motion are at the epicenter of converging megatrends and shifting consumers' priorities toward personalized experiences, health and wellness, plus instant synchronization of digital connection across all aspects of life. She noted that from CES to Auto Shanghai, mobility is evolving into extensions of living rooms, offices, entertainment and gaming spaces where seating and user experience become the primary product.
"Comfort and motion are no longer features. Together, they are the defining brand experience and what wins buyers. Thanks to Leggett's heritage of engineering comfort and motion everywhere people sleep, work, live and move, no one knows comfort and motion like Leggett," Cirstea said.
Leadership & Engineering Shifts
Since taking the helm in October 2025, Cirstea aligned the leadership team and the global enterprise around faster decision-making, customer intimacy and a culture of empowerment and accountability. Central to these efforts, Leggett Dynamics optimized its global engineering, R&D, and operations by expanding regional capabilities while streamlining development and collaboration to accelerate innovation in new and existing products, processes and production.
"By combining ergonomics expertise, software vertical integration and a resilient local-for-local footprint, we help our customers move faster and bring intelligent comfort and motion solutions to market at scale."
Portfolio Shift
Leggett Dynamics also introduced a new structure for products and services across four key areas.
Comfort Systems Platform: Massage, Lumbar, Bolster and Suspension
Motion Systems Platform: Motors, Actuators and Cables
Software & Integration Platform: Software, Hardware and E/E Architecture Integration; Intelligent Software-Defined Comfort and User-Experience
Innovation Services: Advanced Engineering Co-Development and Ergonomics Studies
Leggett Dynamics will debut its new brand and showcase its latest innovations at two upcoming industry events: The Automotive Engineering Expo in Nagoya, Japan (June 17-19, Booth 96) and Automotive Interiors Expo Europe in Stuttgart, Germany (June 23-25, Booth #3216).
About Leggett Dynamics
Leggett Dynamics is the brand representing the automotive businesses of Leggett & Platt, Incorporated. Under the Leggett Dynamics brand, these businesses deliver eMotion and Comfort solutions for automotive seating, liftgates, doors, sunroofs, and more. Leggett Dynamics businesses operate globally, with a footprint spanning 28 locations across 12 countries, and employing more than 6,200 people, with key locations in Detroit, Nuremberg, and Shanghai. As a strategic partner to more than 140 customers worldwide, Leggett Dynamics offers a Comfort Systems Platform (massage, lumbar, bolster and suspension), Motion Systems Platform (motors, actuators, and cables), Software & Integration Platform, and Innovation Services, including advanced engineering co-development and human factors studies. Leggett Dynamics is a brand within Leggett & Platt, Inc. (NYSE:LEG), a manufacturer of residential, industrial, and furniture products that has been engineering comfort for over 140 years across the places where people sleep, work, live, and move.
Link to Press Kit: Leggett Dynamics Launch
Media Contact:
Dawn K. Looney, APR
VP of Global Branding, Marketing & Communications
Leggett Dynamics
Email: [email protected]
Phone: +1.248.980.1248
Liwen Tao
Manager of AP Branding, Marketing & Communications
Leggett Dynamics
Email: [email protected]
Key Takeaways LEG's automotive unit is now Leggett Dynamics, targeting intelligent motion, comfort and software systems.Leggett Dynamics groups its offerings into Comfort, Motion, Software & Integration and Innovation Services.LEG shares fell 2.5% on the rebrand news, and the stock is down 11.9% over the past six months. Leggett & Platt, Incorporated (LEG - Free Report) recently announced that its automotive business division, Leggett & Platt Automotive, has rebranded as Leggett Dynamics. This marks a strategic evolution from a traditional automotive supplier to a technology-driven provider of intelligent motion, comfort and software-integrated systems. The new identity reflects LEG’s ambition to expand beyond automotive end markets and unlock new growth opportunities through innovation, diversification and advanced engineering solutions.
Following the news, LEG stock declined 2.5% during trading hours yesterday.
Portfolio Shift & Innovation With Leggett DynamicsThrough its new tagline, "eMotion & Comfort for everyone, everywhere, every day," Leggett Dynamics will aim to develop technologies that enhance movement, adjustability, wellness and user experience across a broad range of applications. Overall, this rebranding move signals a broader growth strategy designed to strengthen Leggett & Platt's market position, diversify its revenue streams and reduce reliance on traditional automotive markets.
Moreover, Leggett Dynamics has reorganized its products and services into four key platforms: Comfort Systems, covering massage, lumbar, bolster and suspension solutions; Motion Systems, focused on motors, actuators and cables; Software & Integration, including software, hardware and E/E architecture integration; and Innovation Services, which provides advanced engineering co-development and ergonomics studies.
The rebranding aligns with Leggett & Platt's long-standing focus on innovation and engineered solutions across the markets it serves. The company has historically leveraged its expertise in comfort, motion and component technologies to develop differentiated products, while continuously adapting its portfolio to evolving customer needs. Through Leggett Dynamics, the company is extending this innovation-driven approach by integrating advanced engineering, software capabilities and ergonomics expertise to create intelligent comfort and motion solutions. The move reflects Leggett & Platt's efforts to accelerate product development, strengthen customer collaboration and expand into adjacent growth markets.
LEG’s Share Price PerformanceShares of Leggett & Platt have declined 11.9% in the past six months compared with the Zacks Furniture industry’s 12.3% fall. Leggett & Platt continues to grapple with weak demand across residential end markets, subdued consumer spending, persistent softness in the U.S. mattress industry and retailer merchandising challenges. Margin pressures also remain due to lower sales volumes, elevated transportation and chemical costs, pricing headwinds within the Flooring business and ongoing supply-chain disruptions.
Image Source: Zacks Investment Research
However, the company has benefited from restructuring initiatives, improved manufacturing efficiency, disciplined cost-control measures and ongoing portfolio optimization efforts. Its Bedding Products segment remains a relative bright spot, supported by metal margin expansion and the realization of restructuring benefits. Additionally, the pending Somnigroup merger provides shareholders with an opportunity to participate in a larger, combined enterprise.
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BKM Wealth Management LLC lessened its stake in W.W. Grainger, Inc. (NYSE:GWW – Free Report) by 26.6% during the 4th quarter, according to its most recent disclosure with the SEC. The institutional investor owned 1,219 shares of the industrial products company’s stock after selling 442 shares during the quarter. BKM Wealth Management LLC’s holdings in W.W. Grainger were worth $1,230,000 at the end of the most recent reporting period.
Other hedge funds have also recently modified their holdings of the company. Brighton Jones LLC raised its stake in W.W. Grainger by 46.8% during the fourth quarter. Brighton Jones LLC now owns 320 shares of the industrial products company’s stock valued at $338,000 after purchasing an additional 102 shares in the last quarter. Empowered Funds LLC raised its stake in W.W. Grainger by 18.0% during the first quarter. Empowered Funds LLC now owns 2,851 shares of the industrial products company’s stock valued at $2,816,000 after purchasing an additional 435 shares in the last quarter. Arrowstreet Capital Limited Partnership raised its stake in W.W. Grainger by 169.6% during the second quarter. Arrowstreet Capital Limited Partnership now owns 3,826 shares of the industrial products company’s stock valued at $3,980,000 after purchasing an additional 2,407 shares in the last quarter. Gamco Investors INC. ET AL purchased a new stake in W.W. Grainger during the second quarter valued at $208,000. Finally, Sei Investments Co. raised its stake in W.W. Grainger by 35.2% during the second quarter. Sei Investments Co. now owns 41,388 shares of the industrial products company’s stock valued at $43,051,000 after purchasing an additional 10,784 shares in the last quarter. Hedge funds and other institutional investors own 80.70% of the company’s stock.
W.W. Grainger Trading Down 1.3% Shares of GWW opened at $1,149.80 on Friday. W.W. Grainger, Inc. has a twelve month low of $906.52 and a twelve month high of $1,218.63. The company has a market cap of $54.42 billion, a P/E ratio of 32.49, a P/E/G ratio of 2.46 and a beta of 1.09. The company has a current ratio of 2.83, a quick ratio of 1.59 and a debt-to-equity ratio of 0.57. The company’s fifty day simple moving average is $1,116.32 and its 200-day simple moving average is $1,047.28.
W.W. Grainger (NYSE:GWW – Get Free Report) last posted its quarterly earnings results on Tuesday, February 3rd. The industrial products company reported $9.45 EPS for the quarter, missing analysts’ consensus estimates of $9.46 by ($0.01). The company had revenue of $4.43 billion during the quarter, compared to the consensus estimate of $4.39 billion. W.W. Grainger had a return on equity of 47.46% and a net margin of 9.51%.The company’s revenue for the quarter was up 4.5% on a year-over-year basis. During the same quarter in the previous year, the company posted $9.71 earnings per share. W.W. Grainger has set its FY 2026 guidance at 42.250-44.750 EPS. As a group, analysts expect that W.W. Grainger, Inc. will post 43.61 EPS for the current year.
W.W. Grainger Dividend Announcement The business also recently declared a quarterly dividend, which was paid on Sunday, March 1st. Stockholders of record on Monday, February 9th were issued a $2.26 dividend. The ex-dividend date was Monday, February 9th. This represents a $9.04 dividend on an annualized basis and a dividend yield of 0.8%. W.W. Grainger’s dividend payout ratio is presently 25.54%.
Wall Street Analysts Forecast Growth A number of equities research analysts recently issued reports on the stock. Barclays upped their price target on shares of W.W. Grainger from $1,044.00 to $1,047.00 and gave the company an “underweight” rating in a research note on Monday, March 16th. Oppenheimer upped their price target on shares of W.W. Grainger from $1,250.00 to $1,300.00 and gave the company an “outperform” rating in a research note on Wednesday, February 4th. JPMorgan Chase & Co. upped their price target on shares of W.W. Grainger from $1,100.00 to $1,165.00 and gave the company a “neutral” rating in a research note on Friday, February 6th. Morgan Stanley increased their target price on shares of W.W. Grainger from $1,100.00 to $1,190.00 and gave the company an “equal weight” rating in a research note on Tuesday, March 3rd. Finally, Weiss Ratings raised shares of W.W. Grainger from a “hold (c+)” rating to a “buy (b-)” rating in a research note on Friday, February 6th. Two analysts have rated the stock with a Buy rating, five have issued a Hold rating and one has given a Sell rating to the company’s stock. Based on data from MarketBeat, the company currently has a consensus rating of “Hold” and an average target price of $1,118.14.
View Our Latest Research Report on GWW
Insider Activity at W.W. Grainger In other news, CFO Deidra C. Merriwether sold 2,339 shares of the company’s stock in a transaction dated Tuesday, March 24th. The shares were sold at an average price of $1,064.73, for a total value of $2,490,403.47. Following the transaction, the chief financial officer directly owned 10,235 shares in the company, valued at approximately $10,897,511.55. This represents a 18.60% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is accessible through the SEC website. Insiders own 6.30% of the company’s stock.
W.W. Grainger Company Profile (Free Report)
W.W. Grainger, Inc (NYSE: GWW) is an industrial supply distributor founded in 1927 and headquartered in Lake Forest, Illinois. The company supplies maintenance, repair and operations (MRO) products and services to businesses, institutions and government customers. Over its long history Grainger has developed a broad product assortment and a national distribution network that supports operations across a range of end markets, including manufacturing, healthcare, hospitality, transportation and public sector organizations.
Grainger’s product portfolio spans core categories such as electrical and lighting, safety and personal protective equipment, material handling, motors and power transmission, plumbing and HVAC, fasteners and adhesives, hand and power tools, and janitorial and facility supplies.
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Resources Investor Relations Journalists Agencies Client Login Send a Release News Products Contact , /PRNewswire/ -- W.W. Grainger, Inc. (NYSE: GWW) announced today that its board of directors approved a quarterly cash dividend of $2.49 per share, an increase of 10% from the most recent company dividend. The dividend is payable on June 1, 2026, to shareholders of record on May 11, 2026.
"In line with Grainger's long-standing commitment to our shareholders, we're pleased to continue our track record of delivering increased annual dividends. This year marks the 55th consecutive year of planned increases and further reinforces our strength in returning excess cash to shareholders and investing in the business to bring value to our customers," said D.G. Macpherson, Grainger Chairman and CEO.
About Grainger
W.W. Grainger, Inc., is a leading broad line distributor with operations primarily in North America and Japan. At Grainger, We Keep the World Working® by serving more than 4.6 million customers worldwide with maintenance, repair and operating (MRO) products and value-added solutions delivered through innovative technology and deep customer expertise. Known for its commitment to service and purpose-driven culture, the Company reported 2025 revenue of $17.9 billion. For more information, visit www.grainger.com.
Resources Investor Relations Journalists Agencies Client Login Send a Release News Products Contact , /PRNewswire/ -- W.W. Grainger, Inc. (NYSE: GWW) held its annual meeting of shareholders virtually today. Chairman and CEO D.G. Macpherson provided a company update, which included 2025 financial and operational highlights.
Shareholders elected the following 12 directors:
Rodney C. Adkins
Neil S. Novich
George S. Davis
Beatriz R. Perez
Katherine D. Jaspon
E. Scott Santi
Christopher J. Klein
Susan Slavik Williams
D.G. Macpherson
Lucas E. Watson
Cindy J. Miller
Steven A. White
Additionally, the shareholders voted in favor of two proposals: (i) to ratify the appointment of Ernst & Young LLP as the company's independent auditor for the 2026 fiscal year, and (ii) to approve the advisory say-on-pay resolution on executive compensation.
About Grainger
W.W. Grainger, Inc., is a leading broad line distributor with operations primarily in North America and Japan. At Grainger, We Keep the World Working® by serving more than 4.6 million customers worldwide with maintenance, repair and operating (MRO) products and value-added solutions delivered through innovative technology and deep customer expertise. Known for its commitment to service and purpose-driven culture, the Company reported 2025 revenue of $17.9 billion.
Comerica Bank reduced its holdings in W.W. Grainger, Inc. (NYSE:GWW – Free Report) by 3.5% in the fourth quarter, according to its most recent filing with the Securities & Exchange Commission. The institutional investor owned 15,863 shares of the industrial products company’s stock after selling 579 shares during the period. Comerica Bank’s holdings in W.W. Grainger were worth $16,006,000 as of its most recent filing with the Securities & Exchange Commission.
A number of other institutional investors and hedge funds have also made changes to their positions in the business. Vanguard Group Inc. grew its stake in shares of W.W. Grainger by 1.9% in the 3rd quarter. Vanguard Group Inc. now owns 5,731,880 shares of the industrial products company’s stock worth $5,462,252,000 after buying an additional 104,607 shares in the last quarter. State Street Corp grew its stake in shares of W.W. Grainger by 0.7% in the 3rd quarter. State Street Corp now owns 1,996,053 shares of the industrial products company’s stock worth $1,902,159,000 after buying an additional 13,779 shares in the last quarter. Parnassus Investments LLC purchased a new position in shares of W.W. Grainger in the 3rd quarter worth $721,202,000. Northern Trust Corp grew its stake in shares of W.W. Grainger by 0.5% in the 3rd quarter. Northern Trust Corp now owns 659,158 shares of the industrial products company’s stock worth $628,151,000 after buying an additional 3,114 shares in the last quarter. Finally, Massachusetts Financial Services Co. MA grew its stake in shares of W.W. Grainger by 7.7% in the 4th quarter. Massachusetts Financial Services Co. MA now owns 477,693 shares of the industrial products company’s stock worth $482,016,000 after buying an additional 34,307 shares in the last quarter. 80.70% of the stock is owned by hedge funds and other institutional investors.
Insider Activity at W.W. Grainger In other news, CFO Deidra C. Merriwether sold 1,488 shares of the business’s stock in a transaction dated Thursday, April 2nd. The shares were sold at an average price of $1,114.28, for a total value of $1,658,048.64. Following the completion of the sale, the chief financial officer owned 10,541 shares in the company, valued at approximately $11,745,625.48. The trade was a 12.37% decrease in their position. The transaction was disclosed in a document filed with the SEC, which can be accessed through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Corporate insiders own 6.30% of the company’s stock.
W.W. Grainger Price Performance W.W. Grainger stock opened at $1,162.50 on Wednesday. The stock has a market cap of $55.02 billion, a price-to-earnings ratio of 32.85, a price-to-earnings-growth ratio of 2.44 and a beta of 1.09. The company has a debt-to-equity ratio of 0.57, a current ratio of 2.83 and a quick ratio of 1.59. W.W. Grainger, Inc. has a 1 year low of $906.52 and a 1 year high of $1,218.63. The firm has a 50-day moving average of $1,117.48 and a two-hundred day moving average of $1,050.71.
W.W. Grainger (NYSE:GWW – Get Free Report) last released its quarterly earnings data on Tuesday, February 3rd. The industrial products company reported $9.45 earnings per share (EPS) for the quarter, missing the consensus estimate of $9.46 by ($0.01). The company had revenue of $4.43 billion during the quarter, compared to analysts’ expectations of $4.39 billion. W.W. Grainger had a net margin of 9.51% and a return on equity of 47.46%. W.W. Grainger’s quarterly revenue was up 4.5% on a year-over-year basis. During the same period last year, the firm earned $9.71 earnings per share. W.W. Grainger has set its FY 2026 guidance at 42.250-44.750 EPS. On average, research analysts forecast that W.W. Grainger, Inc. will post 43.61 earnings per share for the current year.
Analysts Set New Price Targets A number of brokerages have commented on GWW. JPMorgan Chase & Co. lifted their price objective on shares of W.W. Grainger from $1,100.00 to $1,165.00 and gave the stock a “neutral” rating in a research note on Friday, February 6th. Oppenheimer lifted their price objective on shares of W.W. Grainger from $1,250.00 to $1,300.00 and gave the stock an “outperform” rating in a research note on Wednesday, February 4th. Sanford C. Bernstein lifted their price target on shares of W.W. Grainger from $1,052.00 to $1,125.00 and gave the stock a “market perform” rating in a research note on Tuesday, April 21st. Barclays lifted their price target on shares of W.W. Grainger from $1,044.00 to $1,047.00 and gave the stock an “underweight” rating in a research note on Monday, March 16th. Finally, Weiss Ratings raised shares of W.W. Grainger from a “hold (c+)” rating to a “buy (b-)” rating in a research note on Friday, February 6th. Two research analysts have rated the stock with a Buy rating, five have assigned a Hold rating and one has assigned a Sell rating to the company’s stock. Based on data from MarketBeat, the company presently has an average rating of “Hold” and a consensus price target of $1,118.14.
View Our Latest Analysis on W.W. Grainger
W.W. Grainger Company Profile (Free Report)
W.W. Grainger, Inc (NYSE: GWW) is an industrial supply distributor founded in 1927 and headquartered in Lake Forest, Illinois. The company supplies maintenance, repair and operations (MRO) products and services to businesses, institutions and government customers. Over its long history Grainger has developed a broad product assortment and a national distribution network that supports operations across a range of end markets, including manufacturing, healthcare, hospitality, transportation and public sector organizations.
Grainger’s product portfolio spans core categories such as electrical and lighting, safety and personal protective equipment, material handling, motors and power transmission, plumbing and HVAC, fasteners and adhesives, hand and power tools, and janitorial and facility supplies.
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Analysts on Wall Street project that W.W. Grainger (GWW - Free Report) will announce quarterly earnings of $10.20 per share in its forthcoming report, representing an increase of 3.5% year over year. Revenues are projected to reach $4.57 billion, increasing 6.1% from the same quarter last year.
The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe.
Ahead of a company's earnings disclosure, it is crucial to give due consideration to changes in earnings estimates. These revisions serve as a noteworthy factor in predicting potential investor reactions to the stock. Numerous empirical studies consistently demonstrate a strong relationship between trends in earnings estimate revision and the short-term price performance of a stock.
While investors typically use consensus earnings and revenue estimates as indicators of quarterly business performance, exploring analysts' projections for specific key metrics can offer valuable insights.
In light of this perspective, let's dive into the average estimates of certain W.W. Grainger metrics that are commonly tracked and forecasted by Wall Street analysts.
Analysts' assessment points toward 'Net Sales- Endless Assortment' reaching $945.46 million. The estimate indicates a year-over-year change of +14.2%.
The average prediction of analysts places 'Net Sales- High-Touch Solutions N.A.' at $3.63 billion. The estimate indicates a change of +6.8% from the prior-year quarter.
The consensus among analysts is that 'Operating earnings (losses)- Endless Assortment' will reach $83.34 million. The estimate compares to the year-ago value of $72.00 million.
It is projected by analysts that the 'Operating earnings (losses)- High-Touch Solutions N.A.' will reach $620.56 million. The estimate compares to the year-ago value of $600.00 million.
View all Key Company Metrics for W.W. Grainger here>>>
Over the past month, shares of W.W. Grainger have returned +2.8% versus the Zacks S&P 500 composite's +10% change. Currently, GWW carries a Zacks Rank #3 (Hold), suggesting that its performance may align with the overall market in the near future. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
Key Takeaways GWW is set to report Q1'26 results on May 7, with sales and earnings expected to rise y/y.Grainger's High-Touch Solutions unit likely saw growth from strength in manufacturing and customer expansion.GWW's Endless Assortment segment benefited from strong customer gains and repeat business momentum. W.W. Grainger, Inc. (GWW - Free Report) is scheduled to report first-quarter 2026 results on May 7, before the opening bell.
The Zacks Consensus Estimate for GWW’s sales is pegged at $4.57 billion, indicating 6.1% growth from the year-ago reported figure.
The Zacks Consensus Estimate for earnings is pegged at $10.20 per share. The consensus estimate for GWW’s earnings has moved up 0.1% in the past 60 days. The estimate indicates a year-over-year increase of 3.5%.
Image Source: Zacks Investment Research
GWW’s Earnings Surprise HistoryGrainger’s earnings beat the Zacks Consensus Estimates in three of the trailing four quarters and missed in one, the average surprise being 1.7%.
Image Source: Zacks Investment Research
What the Zacks Model Unveils for GraingerOur model does not conclusively predict an earnings beat for GWW this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, but that is not the case here.
You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Earnings ESP: Grainger has an Earnings ESP of 0.00%.
Zacks Rank: GWW currently has a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Have Shaped GWW’s Q1 PerformanceGrainger is anticipated to have witnessed strong growth in core product sales for the past few quarters. GWW has been focusing on enhancing the end-to-end customer experience through investments in its e-commerce and digital capabilities, while executing supply-chain improvement initiatives. These factors are likely to have contributed to its quarterly performance. We expect organic daily sales growth of 7.8%.
The company’s High-Touch Solutions North America segment is expected to have benefited from strength in commercial, transportation and heavy manufacturing; strong revenue growth across its North America regions; and an expansion in the number of large and midsize customers. Our model projects quarterly organic daily sales growth of 6.4% from the year-ago quarter's reported level.
We expect the segment’s sales to be $3.61 billion for the first quarter, suggesting 6.4% growth from the first-quarter 2025 reported level.
GWW’s Endless Assortment segment is likely to have benefited from robust customer acquisition and repeat business.
Our model predicts quarterly organic daily sales to grow 13.3% from the prior-year reported level. Customer growth at MonotaRO is expected to have positively impacted the segment’s sales. Our model predicts the Endless Assortment segment’s sales to be $929 million, indicating a 12.2% rally from the prior-year quarter’s reported figure.
However, GWW has been witnessing elevated material and freight costs for some time. This, coupled with higher operating costs and incremental SG&A costs from higher technology investments, is likely to have negatively impacted its margins.
Grainger Stock’s Price PerformanceGWW shares have gained 8.2% in a year against the industry’s 4.3% loss. In comparison, the broader Zacks Industrial Products sector has returned 33.9% and the S&P 500 grew 34.4%.
Image Source: Zacks Investment Research
Performances of Other Industrial Services StocksMSC Industrial Direct Company, Inc. (MSM - Free Report) reported second-quarter fiscal 2026 (ended on Feb. 28, 2026) adjusted earnings per share of 82 cents, missing the Zacks Consensus Estimate of 84 cents. The bottom line increased 13.9% year over year.
MSC Industrial generated sales of around $918 million in the quarter under review, up 2.9% from $935 million in the year-ago quarter. The top line missed the Zacks Consensus Estimate of $934 million.
SiteOne Landscape Supply, Inc. (SITE - Free Report) posted first-quarter 2026 adjusted loss per share of 60 cents. The Zacks Consensus Estimate was pegged at a loss of 45 cents. The company posted a loss of 61 cents in the year-ago quarter.
SiteOne Landscape Supply generated sales of around $940 million in the quarter under review, up 0.1% from $939 million in the year-ago quarter. The top line missed the Zacks Consensus Estimate of $985 million.
Industrial Services Stock Awaiting ResultsHudson Technologies, Inc. (HDSN - Free Report) is anticipated to release first-quarter 2026 results on May 6.
The Zacks Consensus Estimate for Hudson’s EPS is pegged at 5 cents for the first quarter, implying a decline of 16.7% from the year-ago reported figure. The consensus estimate for Hudson Industrial’s total sales is pinned at $57 million, indicating a year-over-year increase of 3.1%.
Strong results across the business;
Company increases full year 2026 outlook
First Quarter Highlights
Delivered sales of $4.7 billion, up 10.1%, or 12.2% on a daily, organic constant currency basis Achieved operating margin of 16.7%, up 110 basis points Generated diluted EPS of $11.65, up 18.2% Produced $739 million in operating cash flow and returned $345 million to Grainger shareholders through dividends and share repurchases Announced quarterly dividend increase of 10% Increasing full year 2026 guidance, including diluted adjusted EPS range of $44.25 to $46.25 , /PRNewswire/ -- Grainger (NYSE: GWW) today reported results for the first quarter of 2026 with sales of $4.7 billion, up 10.1%, or 12.2% on a daily, organic constant currency basis, and diluted EPS of $11.65, up 18.2% compared to the first quarter of 2025.
"We delivered great results in the first quarter driven by strong execution across both segments," said D.G. Macpherson, Chairman and CEO. "Despite ongoing uncertainty with tariffs and the broader geopolitical climate, we're seeing positive signs with the demand environment and are increasing our 2026 guidance to reflect the strong start and continued momentum."
2026 First Quarter Financial Summary
($ in millions, except per share amounts)
Q1 2026(1)
Q1 2025(1)
Q1'26 vs. Q1'25
Fav. / (Unfav.)
Net Sales
$4,742
$4,306
10.1 %
Gross Profit
$1,896
$1,710
10.9 %
Operating Earnings
$793
$672
18.0 %
Net Earnings Attributable to W.W.
Grainger, Inc.
$555
$479
15.9 %
Diluted Earnings Per Share
$11.65
$9.86
18.2 %
Gross Profit Margin
40.0 %
39.7 %
30 bps
Operating Margin
16.7 %
15.6 %
110 bps
Effective Tax Rate
25.1 %
23.9 %
(120) bps
(1) Results are consistent on a reported and adjusted basis.
Revenue
Sales in the quarter increased 10.1% compared to the first quarter of 2025. When normalizing for the Company's exit from the U.K. market and the impact of foreign currency exchange, sales on a daily, organic constant currency basis increased 12.2% compared to the first quarter of 2025.
In the High-Touch Solutions - N.A. segment, sales were up 10.5%, or 10.0% on daily, constant currency basis compared to the first quarter of 2025. Results for the segment were driven by volume growth and price inflation as tariff costs are passed. In the Endless Assortment segment, sales were up 19.6%, or 21.9% on a daily, organic constant currency basis, compared to the first quarter of 2025. Growth for the segment was driven by strong performance at both MonotaRO and Zoro.
Gross Profit Margin
Gross profit margin was 40.0% in the first quarter of 2026, up 30 basis points compared to the first quarter of 2025 as strength from both segments and a benefit related to the Company's exit from the U.K. market drove results.
In the High-Touch Solutions - N.A. segment, gross profit margin was 42.6%, up 20 basis points compared to the prior year quarter largely due to favorable product mix and freight. In the Endless Assortment segment, gross profit margin increased by 40 basis points from the first quarter of 2025 due primarily to margin improvement at Zoro.
Earnings
For the first quarter of 2026, total Company operating earnings were $793 million, up 18.0% compared to the first quarter of 2025. Operating margin was 16.7%, a 110 basis point increase compared to the first quarter of 2025. This increase in operating margin was driven by gross margin and sales leverage improvement in both segments and a benefit related to the Company's exit from the U.K. market.
Diluted earnings per share for the first quarter of 2026 were $11.65, up 18.2% compared to the first quarter of 2025. The increase was due primarily to strong operating performance and fewer shares outstanding, partly offset by a higher effective tax rate.
Tax Rate
For the first quarter of 2026, the effective tax rate was 25.1%, compared to 23.9% in the first quarter of 2025. The increase in the effective tax rate was primarily due to decreased tax credit activity in the current year period and the impact of tax legislation effective in 2026.
Cash Flow
During the first quarter of 2026, the Company generated $739 million of cash flow from operating activities as net earnings were aided by favorable working capital. The Company invested $170 million in capital expenditures, resulting in free cash flow of $569 million. During the quarter, the Company returned $345 million to Grainger shareholders through dividends and share repurchases.
Guidance
The Company is updating the following guidance ranges for 2026:
Total Company(1)
Previous 2026 Guidance Range
(as of February 3, 2026)
Updated 2026 Guidance Range
(as of May 7, 2026)
Net Sales
$18.7 - $19.1 billion
$19.2 - $19.6 billion
Sales growth
4.2% - 6.7%
6.7% - 9.1%
Daily, organic constant currency sales growth
6.5% - 9.0%
9.5% - 12.0%
Gross Profit Margin
39.2% - 39.5%
39.2% - 39.5%
Operating Margin
15.4% - 15.9%
15.6% - 16.0%
Diluted Earnings per Share
$42.25 - $44.75
$44.25 - $46.25
Operating Cash Flow
$2.125 - $2.325 billion
$2.2 - $2.4 billion
CapEx (cash basis)
$0.55 - $0.65 billion
$0.55 - $0.65 billion
Share Buyback
$0.95 - $1.05 billion
$0.95 - $1.05 billion
Effective Tax Rate
~25.0%
~25.0%
Segment Operating Margin
High-Touch Solutions - N.A.
16.9% - 17.4%
17.0% - 17.4%
Endless Assortment
10.0% - 10.5%
10.2% - 10.6%
(1) Guidance provided is on an adjusted basis. Daily, organic constant currency sales growth is adjusted for the impact of certain divested or closed businesses in the comparable prior year period post date of divestiture or closure and changes in foreign currency exchange. The Company does not reconcile forward-looking non-GAAP financial measures. For further details see the supplemental information of this release.
Webcast
The Company will conduct a live conference call and webcast at 11:00 a.m. ET on Thursday, May 7, 2026, to discuss the first quarter results. The event will be hosted by D.G. Macpherson, Chairman and CEO, and Deidra Merriwether, Senior Vice President and CFO, and can be accessed at invest.grainger.com. To access the conference call via phone, please send a request to [email protected]. For those unable to participate in the live event, a webcast replay will be available for 90 days at invest.grainger.com.
About Grainger
W.W. Grainger, Inc., is a leading broad line distributor with operations primarily in North America and Japan. At Grainger, We Keep the World Working® by serving more than 4.6 million customers worldwide with maintenance, repair and operating (MRO) products and value-added solutions delivered through innovative technology and deep customer expertise. Known for its commitment to service and purpose-driven culture, the Company reported 2025 revenue of $17.9 billion. For more information, visit www.grainger.com.
Visit invest.grainger.com to view information about the Company, including a supplement regarding 2026 first quarter results and additional Company information.
Safe Harbor Statement
All statements in this communication, other than those relating to historical facts, are "forward-looking statements" under the federal securities laws. Forward-looking statements can generally be identified by their use of terms such as "anticipate," "estimate," "believe," "expect," "could," "forecast," "may," "intend," "plan," "predict," "project," "will," or "would," and similar terms and phrases, including references to assumptions. Grainger cannot guarantee that any forward-looking statement will be realized and achievement of future results is subject to risks and uncertainties, many of which are beyond Grainger's control, which could cause Grainger's results to differ materially from those that are presented. Forward-looking statements include, but are not limited to, statements about future strategic plans and future financial and operating results. Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements include, without limitation: inflation, higher product costs or other expenses, including operational and administrative expenses; a major loss of customers; loss or disruption of sources of supply; changes in customer or product mix; increased competitive pricing pressures; changes in third-party practices regarding digital advertising; failure to enter into or sustain contractual arrangements on a satisfactory basis with group purchasing organizations; failure to develop, manage or implement new technology initiatives or business strategies including with respect to Grainger's eCommerce platforms and artificial intelligence; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in Grainger's gross profit margin; Grainger's responses to market pressures; the outcome of pending and future litigation or governmental or regulatory proceedings, including with respect to wage and hour, anti-bribery and corruption, environmental, regulations related to advertising, marketing and the internet, consumer protection, pricing (including disaster or emergency declaration pricing statutes), product liability, compliance or safety, trade and export compliance, general commercial disputes, or privacy and cybersecurity matters; investigations, inquiries, audits and changes in laws and regulations; failure to comply with laws, regulations and standards, including new or stricter environmental laws or regulations; government contract matters, including new or revised provisions relating to contract compliance or performance; the impact of any government shutdown; disruption or breaches of information technology or data security systems involving Grainger or third parties on which Grainger depends; general industry, economic, market or political conditions; general global economic conditions, including existing, new, or increased tariffs, trade issues and changes in trade policies, inflation, and interest rates; currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of Grainger's common stock; an incident that adversely impacts Grainger's reputation or brand; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; effects of outbreaks of pandemic disease or viral contagions, global conflicts, natural or human induced disasters, extreme weather, and other catastrophes or conditions; effects of climate change; failure to execute on our corporate responsibility efforts; competition for, or failure to attract, retain, train, motivate and develop executives and key team members; loss of key members of management or key team members; loss of operational flexibility and potential for work stoppages or slowdowns if team members unionize or join a collective bargaining arrangement; changes in effective tax rates; changes in credit ratings or outlook; Grainger's incurrence of indebtedness or failure to comply with restrictions and obligations under its debt agreements and instruments and other factors that can be found in our filings with the Securities and Exchange Commission, including our most recent periodic reports filed on Form 10-K and Form 10-Q, which are available on our Investor Relations website. Forward-looking statements are given only as of the date of this communication and we disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In millions of dollars, except for share and per share amounts)
(Unaudited)
Three Months Ended March 31,
2026
2025
Net sales
$ 4,742
$ 4,306
Cost of goods sold
2,846
2,596
Gross profit
1,896
1,710
Selling, general and administrative expenses
1,103
1,038
Operating earnings
793
672
Other (income) expense:
Interest expense – net
21
21
Other – net
(3)
(6)
Total other expense – net
18
15
Earnings before income taxes
775
657
Income tax provision
194
157
Net earnings
581
500
Less net earnings attributable to noncontrolling interest
26
21
Net earnings attributable to W.W. Grainger, Inc.
$ 555
$ 479
Earnings per share:
Basic
$ 11.67
$ 9.88
Diluted
$ 11.65
$ 9.86
Weighted average number of shares outstanding:
Basic
47.3
48.2
Diluted
47.4
48.3
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of dollars)
(Unaudited)
As of
(Unaudited)
Assets
March 31, 2026
December 31, 2025
Current assets
Cash and cash equivalents
$ 695
$ 585
Accounts receivable (less allowance for credit
losses of $32 and $32)
2,627
2,329
Inventories – net
2,385
2,394
Prepaid expenses and other current assets
200
176
Total current assets
5,907
5,484
Property, buildings and equipment – net
2,359
2,268
Goodwill
358
360
Intangibles – net
268
265
Operating lease right-of-use
342
345
Other assets
239
240
Total assets
$ 9,473
$ 8,962
Liabilities and Shareholders' Equity
Current liabilities
Current maturities
$ 2
$ 126
Trade accounts payable
1,220
963
Accrued compensation and benefits
285
343
Operating lease liability
71
73
Accrued expenses
423
386
Income taxes payable
198
49
Total current liabilities
2,199
1,940
Long-term debt
2,409
2,362
Long-term operating lease liability
299
301
Deferred income taxes and tax uncertainties
128
121
Other non-current liabilities
95
97
Shareholders' equity
4,343
4,141
Total liabilities and shareholders' equity
$ 9,473
$ 8,962
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of dollars)
(Unaudited)
Three Months Ended March 31,
2026
2025
Cash flows from operating activities:
Net earnings
$ 581
$ 500
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Provision for credit losses
6
7
Deferred income taxes and tax uncertainties
8
(4)
Depreciation and amortization
62
61
Non-cash lease expense
20
20
Stock-based compensation
14
12
Change in operating assets and liabilities:
Accounts receivable
(303)
(128)
Inventories
5
6
Prepaid expenses and other assets
(50)
(19)
Trade accounts payable
253
154
Operating lease liabilities
(24)
(25)
Accrued liabilities
(5)
(42)
Income taxes – net
173
106
Other non-current liabilities
(1)
(2)
Net cash provided by operating activities
739
646
Cash flows from investing activities:
Capital expenditures
(170)
(125)
Other – net
(8)
—
Net cash used in investing activities
(178)
(125)
Cash flows from financing activities:
Short-term borrowings (repayments), original maturities of 90 days
or less, net
(125)
—
Proceeds from debt
50
1
Payments of debt
(1)
(502)
Proceeds from stock options exercised
6
2
Payments for employee taxes withheld from stock awards
(5)
(3)
Purchases of treasury stock
(237)
(281)
Purchases of noncontrolling interests
(25)
—
Cash dividends paid
(108)
(115)
Other – net
(1)
—
Net cash used in financing activities
(446)
(898)
Exchange rate effect on cash and cash equivalents
(5)
7
Net change in cash and cash equivalents
110
(370)
Cash and cash equivalents at beginning of period
585
1,036
Cash and cash equivalents at end of period
$ 695
$ 666
SUPPLEMENTAL INFORMATION - RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES (Unaudited)
The Company supplements the reporting of financial information determined under U.S. generally accepted accounting principles (GAAP) with the non-GAAP financial measures as defined below. The Company believes these non-GAAP financial measures provide meaningful information to assist investors in understanding financial results and assessing future performance as they provide a better baseline for analyzing the ongoing performance of its business by excluding items that may not be indicative of core operating results.
Basis of presentation
The Company has a controlling ownership interest in MonotaRO, which is part of the Endless Assortment segment. MonotaRO's results are fully consolidated, reflected in U.S. GAAP, and reported one-month in arrears. Results will differ from MonotaRO's externally reported financials which follow Japanese GAAP.
Adjusted gross profit, adjusted SG&A, adjusted operating earnings, adjusted operating margin, adjusted net earnings, adjusted diluted EPS
Exclude certain non-recurring items, like restructuring charges, asset impairments, gains and losses associated with business divestitures or closures and other non-recurring, infrequent or unusual gains and losses (together referred to as "non-GAAP adjustments"), from the Company's most directly comparable reported U.S. GAAP figures (reported gross profit, SG&A, operating earnings, net earnings and EPS). The Company believes these non-GAAP adjustments provide meaningful information to assist investors in understanding financial results and assessing future performance as they provide a better baseline for analyzing the ongoing performance of its business by excluding items that may not be indicative of core operating results.
Free cash flow (FCF)
Calculated using total cash provided by operating activities less capital expenditures. The Company believes the presentation of FCF allows investors to evaluate the capacity of the Company's operations to generate free cash flow.
Daily sales
Refers to sales for the period divided by the number of U.S. selling days for the period.
Daily, constant currency sales
Refers to daily sales adjusted for changes in foreign currency exchange rates.
Daily, organic constant currency sales
Refers to daily sales excluding the sales of certain divested or closed businesses in the comparable prior year period post date of divestiture or closure and changes in foreign currency exchange rates.
Foreign currency exchange
Calculated by dividing current period local currency daily sales by current period average exchange rate and subtracting the current period local currency daily sales divided by the prior period average exchange rate.
As non-GAAP financial measures are not standardized, it may not be possible to compare these measures with other companies' non-GAAP measures having the same or similar names. These non-GAAP measures should not be considered in isolation or as a substitute for reported results. These non-GAAP measures reflect an additional way of viewing aspects of operations that, when viewed with GAAP results, provide a more complete understanding of the business. This press release also includes certain non-GAAP forward-looking information. The Company believes that a quantitative reconciliation of such forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reconciliation of these non-GAAP financial measures would require the Company to predict the timing and likelihood of future restructurings, asset impairments, and other charges. Neither of these forward-looking measures, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, a reconciliation of the most directly comparable forward-looking GAAP measures is not provided.
The reconciliations provided below reconcile GAAP financial measures to non-GAAP financial measures used in this release: daily sales; daily, organic constant currency sales; and free cash flow.
Sales growth for the three months ended March 31, 2026
(percent change compared to prior year period)
(unaudited)
Q1 2026
Total Company
High-Touch Solutions - N.A.
Endless Assortment
Reported sales
10.1 %
10.5 %
19.6 %
Daily impact
— %
— %
— %
Daily sales(1)
10.1 %
10.5 %
19.6 %
Foreign currency exchange(2)
(0.2) %
(0.5) %
0.9 %
Business divestiture(3)
2.3 %
— %
1.4 %
Daily, organic constant currency sales
12.2 %
10.0 %
21.9 %
(1) Based on U.S. selling days, there were 63 selling days in Q1 2026 and Q1 2025
(2) Excludes the impact of year-over-year foreign currency exchange rate fluctuations
(3) Excludes the net sales results of the divested Cromwell business and closed Zoro U.K. business, announced in the third quarter of 2025 and
completed in the fourth quarter of 2025, in the prior year period on a daily basis
Free cash flow (FCF) for the three months ended March 31, 2026
(in millions of dollars)
(unaudited)
Key Takeaways Grainger Q1 EPS rose 18.2% y/y to $11.65, beating estimates as sales climbed 10.1% to $4.74 billion.GWW saw margin growth, with the gross margin at 40% and the operating margin up to 16.7% on strong execution.Grainger raised its 2026 guidance, projecting sales up to $19.6B and EPS of $44.25-$46.25. W.W. Grainger, Inc. (GWW - Free Report) has posted first-quarter 2026 earnings of $11.65 per share, up 18.2% year over year and beating the Zacks Consensus Estimate of $10.20. Quarterly sales rose 10.1% from a year ago to $4.74 billion, topping the consensus mark of $4.57 billion.
Results reflected broad-based demand and solid execution across the portfolio, highlighted by daily, organic constant-currency sales growth of 12.2% in the quarter.
GWW Margin Expansion Drives Operating LeverageProfitability improved as gross profit margin expanded 30 basis points to 40% from the year-ago period. The company attributed the lift to strength in both segments and a benefit tied to exiting the U.K. market.
The operating margin advanced 110 basis points to 16.7%, supported by the combination of gross-margin improvement and sales leverage. Operating earnings increased to $793 million from $672 million in the prior-year quarter.
Grainger’s High-Touch Segment Shows Solid MixIn High-Touch Solutions – N.A., sales were $3.75 billion, up 10.5% year over year, with daily, constant-currency growth of 10%. The upside was driven by volume gains and price inflation as tariff-related costs were passed through, indicating continued pricing discipline in the core distribution business. We expected the segment’s sales to be $3.61 billion for the first quarter.
Segment margins also moved higher. The gross margin increased to 42.6% and the operating margin rose to 18.3%, with the company noting favorable product mix and freight as offsets to higher payroll, benefits and marketing investment.
GWW’s Endless Assortment Posts Faster GrowthEndless Assortment continued to outgrow the rest of the company, with sales rising 19.6% year over year to $990 million. Our model predicted the Endless Assortment segment’s sales to be $929 million for the quarter. On a daily, organic constant-currency basis, the segment delivered 21.9% growth, driven by strong performances at MonotaRO and Zoro.
Profitability accelerated alongside growth. The segment’s operating margin climbed to 10.6%, up 190 basis points, benefiting from higher gross margin flow-through and top-line leverage.
Grainger Q1 Cash Flow & Balance Sheet UpdatesCash generation remained a notable support point. Cash provided by operating activities came in at $739 million compared with the prior-year quarter’s $646 million. Capital spending totaled $170 million, resulting in a free cash flow of $569 million.
Grainger returned $345 million to shareholders through dividends and share repurchases, and it announced a 10% increase in the quarterly dividend. On the balance sheet, cash and cash equivalents ended at $695 million compared with $585 million at the end of 2025. The long-term debt was $2.41 billion as of March 31, 2026.
GWW Raises 2026 ViewFollowing the strong start, the company has raised the 2026 guidance. It expects net sales of $19.2-$19.6 billion, up from the prior mentioned $18.7-$19.1 billion. Earnings per share are expected to be $44.25-$46.25 compared with the previously mentioned $42.25-$44.75.
Grainger Stock’s Price PerformanceGWW shares have gained 12.8% in a year against the industry’s 1.1% loss. In comparison, the broader Zacks Industrial Products sector has returned 51.4% and the S&P 500 grew 37%.
Image Source: Zacks Investment Research
GWW’s Zacks RankThe company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Grainger’s Peer PerformancesMSC Industrial Direct Company, Inc. (MSM - Free Report) reported second-quarter fiscal 2026 (ended on Feb. 28, 2026) adjusted earnings per share of 82 cents, missing the Zacks Consensus Estimate of 84 cents. The bottom line increased 13.9% year over year.
MSC Industrial generated sales of around $918 million in the quarter under review, up 2.9% from $935 million in the year-ago quarter. The top line missed the Zacks Consensus Estimate of $934 million.
SiteOne Landscape Supply, Inc. (SITE - Free Report) posted first-quarter 2026 adjusted loss per share of 60 cents. The Zacks Consensus Estimate was pegged at a loss of 45 cents. The company posted a loss of 61 cents in the year-ago quarter.
SiteOne Landscape Supply generated sales of around $940 million in the quarter under review, up 0.1% from $939 million in the year-ago quarter. The top line missed the Zacks Consensus Estimate of $985 million.
Hudson Technologies, Inc. (HDSN - Free Report) registered first-quarter 2026 adjusted earnings per share of 1 cent, missing the Zacks Consensus Estimate of 5 cents. The company posted earnings of 6 cents in the year-ago quarter.
Hudson Technologies generated sales of around $60 million in the quarter under review, up 9.1% from $55 million in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $57 million.
W.W. Grainger (GWW - Free Report) came out with quarterly earnings of $11.65 per share, beating the Zacks Consensus Estimate of $10.2 per share. This compares to earnings of $9.86 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +14.23%. A quarter ago, it was expected that this seller of maintenance and other supplies would post earnings of $9.43 per share when it actually produced earnings of $9.44, delivering a surprise of +0.11%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times.
W.W. Grainger, which belongs to the Zacks Industrial Services industry, posted revenues of $4.74 billion for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 3.80%. This compares to year-ago revenues of $4.31 billion. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
W.W. Grainger shares have added about 15.9% since the beginning of the year versus the S&P 500's gain of 7.6%.
What's Next for W.W. Grainger?While W.W. Grainger has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for W.W. Grainger was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $10.96 on $4.78 billion in revenues for the coming quarter and $43.61 on $18.95 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Industrial Services is currently in the top 41% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Eos Energy Enterprises, Inc. (EOSE - Free Report) , another stock in the same industry, has yet to report results for the quarter ended March 2026. The results are expected to be released on May 13.
This company is expected to post quarterly loss of $0.28 per share in its upcoming report, which represents a year-over-year change of -40%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.
Eos Energy Enterprises, Inc.'s revenues are expected to be $56.44 million, up 439.6% from the year-ago quarter.
W.W. Grainger (GWW - Free Report) reported $4.74 billion in revenue for the quarter ended March 2026, representing a year-over-year increase of 10.1%. EPS of $11.65 for the same period compares to $9.86 a year ago.
The reported revenue compares to the Zacks Consensus Estimate of $4.57 billion, representing a surprise of +3.8%. The company delivered an EPS surprise of +14.23%, with the consensus EPS estimate being $10.20.
While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.
As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.
Here is how W.W. Grainger performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:
Total Reported Growth: 10.1% versus 6.1% estimated by six analysts on average.Net Sales- Endless Assortment: $990 million compared to the $945.46 million average estimate based on six analysts. The reported number represents a change of +19.6% year over year.Net Sales- High-Touch Solutions N.A.: $3.75 billion compared to the $3.63 billion average estimate based on six analysts. The reported number represents a change of +10.5% year over year.Operating earnings (losses)- Endless Assortment: $105 million compared to the $83.34 million average estimate based on five analysts.Operating earnings (losses)- High-Touch Solutions N.A.: $688 million versus the five-analyst average estimate of $620.56 million.View all Key Company Metrics for W.W. Grainger here>>>
Shares of W.W. Grainger have returned +5.3% over the past month versus the Zacks S&P 500 composite's +11% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term.
Insider Selling: MarketAxess (NASDAQ:MKTX) General Counsel Sells 100 Shares of StockMarketBeat
MarketAxess Holdings Inc. (NASDAQ:MKTX - Get Free Report) General Counsel Scott Pintoff sold 100 shares of the stock in a transaction dated Wednesday, June 10th. The stock was sold at an average price of $116.03, for a total transaction of $11,603.00. Following the transaction, the general counsel owned 11,786 shares in the company, valued at approximately $1,367,529.58. The trade was a 0.84% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at this hyperlink.
NASDAQ:MKTX
Read Insider Selling: MarketAxess (NASDAQ:MKTX) General Counsel Sells 100 Shares of Stock
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What are the Zacks Style Scores? The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.
The Style Scores are broken down into four categories:
Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.
Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.
Momentum ScoreMomentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.
VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.
How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.
Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +23.7% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.
That's where the Style Scores come in.
To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.
Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: W.W. Grainger (GWW - Free Report) Incorporated in 1928, IL-based W.W. Grainger Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services. Its operations are primarily in North America, Japan and the U.K. Its customers represent a wide array of industries including government, manufacturing, transportation, commercial and contractors. Its products include material-handling equipment, safety and security supplies, lighting and electrical products, power and hand tools, pumps and plumbing supplies, cleaning and maintenance supplies, and metalworking tools.
GWW is a #3 (Hold) on the Zacks Rank, with a VGM Score of B.
Momentum investors should take note of this Industrial Products stock. GWW has a Momentum Style Score of B, and shares are up 6.3% over the past four weeks.
For fiscal 2026, six analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $1.36 to $44.98 per share. GWW boasts an average earnings surprise of +4.2%.
With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, GWW should be on investors' short list.
On May 28, 2026, we conducted a DCF analysis for W.W. Grainger Inc GWW , a company that has shown a price performance of +24.0% year-to-date and +15.3% over the past year. Despite this positive performance, our analysis indicates that the stock may be overvalued. Here are some key takeaways:
DCF Earnings-based intrinsic value of $940.91 vs current price of $1246.03 (margin of safety: -32.4%) DCF FCF-based intrinsic value of $511.59 vs current price (second opinion indicates significant overvaluation) GF Score™ of 93/100 suggests high reliability of the DCF inputs What Is GWW Worth? DCF Earnings-Based Model In our DCF earnings-based model, we assume a two-stage growth process for W.W. Grainger Inc. The first stage involves a high growth rate for the initial 10 years, followed by a terminal phase with a more modest growth rate. Below are the assumptions used in this model:
Parameter Value Current EPS (TTM, excl. non-recurring) $41.27 10-Year Growth Rate 15.3% 10-Year Treasury Rate 4.49% Discount Rate (ceil(Treasury) + 6%) 11% Terminal Growth Rate 4% The growth phase (Years 1-10) sees EPS growing at 15.3% per year, discounted at 11%. The terminal phase (Years 11-20) assumes a 4% growth rate, also discounted at 11%. Below is a summary of the calculations:
Stage Description Value Growth Stage (Years 1-10) EPS growing at 15.3%, discounted at 11% $511.69 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 11% $429.22 Intrinsic Value Growth + Terminal $940.91 With a current price of $1246.03 and an intrinsic value of $940.91, W.W. Grainger Inc appears modestly overvalued with a margin of safety of -32.4%. It is important to note that GuruFocus uses EPS without non-recurring items because research shows stock prices correlate more closely with earnings than free cash flow. For further details, visit the GWW DCF Calculator.
What Does the Free Cash Flow DCF Say? When we analyze W.W. Grainger Inc using the Free Cash Flow (FCF) DCF model, we arrive at an intrinsic value of $511.59. This value is significantly lower than the earnings-based intrinsic value of $940.91, indicating a disagreement between the two models. The FCF-based model suggests that the stock is significantly overvalued with a margin of safety of -143.6%.
How Does GF Value™ Compare to the DCF Models? The GF Value™ for W.W. Grainger Inc is $1106.15, providing a third perspective on valuation. GF Value™ is GuruFocus' proprietary measure calculated from historical trading multiples, past business growth, and future performance estimates. While the DCF models indicate overvaluation, the GF Value™ suggests a smaller degree of overvaluation at 12.6%. This discrepancy highlights the importance of considering multiple valuation methods. For more information, visit the GF Value™ page.
What Does GWW's GF Score™ Tell Us? The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have been found to generate higher long-term returns (backtested 2006-2021). Below is a summary of GWW's GF Score™ metrics:
Metric Rating GF Score™ 93/100 Financial Strength 8/10 Profitability 9/10 Growth 9/10 Valuation 6/10 Momentum 8/10 W.W. Grainger Inc has a predictability rank of 0/5 stars, indicating that the DCF model may be less reliable for this stock. For more details, visit the GWW stock page.
Key Assumptions and Limitations It is important to note that DCF models are highly sensitive to growth rate and discount rate assumptions. Stocks with low predictability ratings, such as W.W. Grainger Inc, produce less reliable DCF estimates. The terminal growth rate of 4% is a simplifying assumption that may not fully capture future market conditions.
What This Means for Investors In summary, the three valuation models—DCF earnings, DCF FCF, and GF Value™—indicate that W.W. Grainger Inc is overvalued. The earnings-based model suggests a value of $940.91, while the FCF model indicates a much lower value of $511.59. The GF Value™ provides a slightly more optimistic view at $1106.15. Overall, the consensus points towards overvaluation. For the full DCF analysis, visit the GWW DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions What is GWW's intrinsic value based on DCF?
Answer: earnings-based $940.91, FCF-based $511.59
Is GWW overvalued or undervalued?
Answer: Based on the DCF and GF Value™ consensus, GWW is overvalued.
How reliable is the DCF model for GWW?
Answer: The predictability rank is 0/5, indicating lower reliability for the DCF model.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
On June 03, 2026, we present a detailed DCF analysis for W.W. Grainger Inc GWW . The stock has shown notable price performance, with a year-to-date increase of 26.2% and a 1-year increase of 19.1%. Here are some key points to consider:
DCF Earnings-based intrinsic value of $940.91 vs current price of $1268.36 (margin of safety: -34.8%) DCF FCF-based intrinsic value of $511.59 vs current price (second opinion shows significant overvaluation) GF Score™ of 93/100 indicates high reliability of the DCF inputs What Is GWW Worth? DCF Earnings-Based Model The DCF earnings-based model for W.W. Grainger Inc GWW utilizes a two-stage approach to estimate the intrinsic value of the stock. In the first stage, we project earnings growth over the next 10 years. In the second stage, we apply a terminal growth rate for the following 10 years. Below are the assumptions used in this model:
Parameter Value Current EPS (TTM, excl. non-recurring) $41.27 10-Year Growth Rate 15.3% 10-Year Treasury Rate 4.48% Discount Rate (ceil(Treasury) + 6%) 11% Terminal Growth Rate 4% In the growth phase (Years 1-10), we expect EPS to grow at 15.3% per year, which is then discounted at a rate of 11%. The value derived from this stage is $511.69 per share. In the terminal phase (Years 11-20), the growth rate slows to a terminal rate of 4%, also discounted at 11%, yielding a value of $429.22 per share. The summary of these calculations is as follows:
Stage Description Value Growth Stage (Years 1-10) EPS growing at 15.3%, discounted at 11% $511.69 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 11% $429.22 Intrinsic Value Growth + Terminal $940.91 Comparing the current price of $1268.36 with the intrinsic value of $940.91 indicates that the stock is modestly overvalued, with a margin of safety of -34.8%. It is important to note that GuruFocus uses EPS without non-recurring items, as research shows stock prices correlate more closely with earnings than with free cash flow. For a detailed calculation, visit the GWW DCF Calculator.
What Does the Free Cash Flow DCF Say? The free cash flow (FCF) based intrinsic value for W.W. Grainger Inc GWW is calculated at $511.59. When comparing this with the earnings-based intrinsic value of $940.91, we see a significant discrepancy. The FCF model suggests that the stock is significantly overvalued, with a margin of safety of -147.9%. This divergence between the two models highlights the importance of considering multiple valuation perspectives.
How Does GF Value™ Compare to the DCF Models? The GF Value™ for W.W. Grainger Inc GWW is calculated at $1107.49, providing a third perspective on valuation. GF Value™ is GuruFocus' proprietary measure, derived from historical trading multiples, past business growth, and future performance estimates. When we analyze all three models (DCF earnings, DCF FCF, and GF Value™), we find that they generally agree on the overvaluation of the stock. For more information, visit the GF Value™ page.
What Does GWW's GF Score™ Tell Us? The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have been found to generate higher long-term returns (backtested 2006-2021). Below is the GF Score™ breakdown for W.W. Grainger Inc GWW :
Metric Rating GF Score™ 93/100 Financial Strength 8/10 Profitability 9/10 Growth 9/10 Valuation 6/10 Momentum 8/10 With a predictability rank of 0/5 stars, it indicates that the DCF model may be less reliable for this stock. For more details, visit the GWW stock page.
Key Assumptions and Limitations It is essential to recognize that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Additionally, stocks with low predictability ratings, such as GWW's 0/5 stars, tend to produce less reliable DCF estimates. The terminal growth rate of 4% used in this analysis is a simplifying assumption that may not reflect future economic conditions.
What This Means for Investors In summary, the three valuation models (DCF earnings, DCF FCF, and GF Value™) indicate that W.W. Grainger Inc GWW is currently overvalued. The earnings-based intrinsic value of $940.91 and the FCF-based intrinsic value of $511.59 both suggest a significant margin of safety, while the GF Value™ of $1107.49 corroborates this assessment.
For the full DCF analysis, visit the GWW DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions What is GWW's intrinsic value based on DCF?
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
W.W. Grainger (GWW - Free Report) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.
The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.
Individual investors often find it hard to make decisions based on rating upgrades by Wall Street analysts, since these are mostly driven by subjective factors that are hard to see and measure in real time. In these situations, the Zacks rating system comes in handy because of the power of a changing earnings picture in determining near-term stock price movements.
As such, the Zacks rating upgrade for W.W. Grainger is essentially a positive comment on its earnings outlook that could have a favorable impact on its stock price.
Most Powerful Force Impacting Stock PricesThe change in a company's future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the near-term price movement of its stock. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their bulk investment action then leads to price movement for the stock.
For W.W. Grainger, rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher.
Harnessing the Power of Earnings Estimate RevisionsAs empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, tracking such revisions for making an investment decision could be truly rewarding. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .
Earnings Estimate Revisions for W.W. GraingerThis seller of maintenance and other supplies is expected to earn $45.34 per share for the fiscal year ending December 2026, which represents no year-over-year change.
Analysts have been steadily raising their estimates for W.W. Grainger. Over the past three months, the Zacks Consensus Estimate for the company has increased 3.9%.
Bottom LineUnlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
You can learn more about the Zacks Rank here >>>
The upgrade of W.W. Grainger to a Zacks Rank #2 positions it in the top 20% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
Dollar General Corporation (NYSE:DG) stock fell on Tuesday after the company reported first-quarter fiscal 2026 results and updated fiscal 2026 guidance.
The discount retailer posted net sales of $10.79 billion, slightly below the consensus estimate of $10.82 billion.
The sales increase of 3.4% was driven by positive sales contributions from new stores and growth in same-store sales, partially offset by the impact of store closures.
Same-Store Sales Rise On Higher Traffic And Transaction GrowthSame-store sales increased 2.0% compared to the first quarter of 2025, reflecting increases of 1.4% in customer traffic and 0.5% in average transaction amount, including growth in each of the consumables, seasonal, apparel, and home products categories.
"We are pleased with our first-quarter EPS performance, which exceeded our expectations as strong operating margin expansion more than offset the impact of severe winter weather and higher fuel costs," said Todd Vasos, Dollar General's chief executive officer. "Our topline results were highlighted by positive customer traffic and balanced category growth,
Margin Expansion Drives Profit GrowthThe company reported a gross profit margin of 31.6%, an increase of 65 basis points, driven primarily by higher inventory markups and lower shrink and inventory damages; partially offset by increased markdowns and transportation costs.
Operating profit increased 10.8% to $638.5 million compared to $576.1 million a year ago.
Earnings came in at $2.00 per share, topping the Street's estimate of $1.88.
Company Lifts Profit GuidanceDollar General reaffirmed its fiscal 2026 guidance, projecting net sales of $44.31 billion to $44.52 billion, roughly in line with analysts' consensus estimate of $44.43 billion.
The company expects net sales growth of about 3.7% to 4.2% in fiscal 2026, compared with 5.2% growth in fiscal 2025.
Dollar General forecasts earnings of $7.20-$7.45, up from prior guidance of $7.10 to $7.35 per share for 2026, versus the $7.25 per share consensus estimate.
The retailer projects same-store sales growth of approximately 2.2% to 2.7% for the year.
Plans 4,700+ Store Projects In 2026For fiscal 2026, Dollar General reiterated plans to execute approximately 4,730 real estate projects.
These include opening about 450 new stores in the United States and about 10 new stores in Mexico, remodeling roughly 2,000 stores through Project Renovate and about 2,250 stores through Project Elevate, and relocating approximately 20 stores.
DG Stock Price Activity: Dollar General shares were down 2.62% at $107.05 at the time of publication on Tuesday, according to Benzinga Pro data.
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Dollar General's inventory shrink of $928 million was roughly 84% of its $1.1 billion net income in 2024, underscoring merchandise losses as a headwind on profits.
Key Takeaways DG posted Q1 EPS of $2.00, topping estimates, while net sales rose 3.4% to $10.787B.DG's same-store sales grew 2% on higher traffic, with gross margin up 65 bps and operating margin at 5.9%.DG opened 195 stores and remodeled 1,370, and lifted FY2026 EPS view to $7.20-$7.45. Dollar General Corporation (DG - Free Report) reported first-quarter fiscal 2026 results, wherein the top line missed the Zacks Consensus Estimate, while the bottom line beat the same. Both net sales and earnings increased year over year, reflecting solid execution of its strategic initiatives, positive customer traffic trends and operating margin expansion, which more than offset the impact of severe winter weather and higher fuel costs. The company witnessed a rise across all major merchandise categories, supported by same-store sales growth and contributions from new stores.
Better-than-expected first-quarter bottom-line performance prompted management to lift its fiscal 2026 earnings view.
More on DG’s Q1 PerformanceDollar General posted quarterly earnings of $2.00 per share, which surpassed the Zacks Consensus Estimate of $1.89. The bottom line increased 12.4% from $1.78 reported in the year-ago quarter.
Net sales of $10,787 million rose 3.4% year over year. Revenues narrowly missed the Zacks Consensus Estimate of $10,822 million. The increase was driven by positive contributions from new stores and growth in same-store sales, partially offset by store closures.
Same-store sales improved 2%, reflecting a 1.4% rise in customer traffic and a 0.5% increase in average transaction amount. The quarter marked positive comparable-sales growth across all major categories, including consumables, seasonal, home products and apparel.
DG’s Key Metrics & Margin InsightsDollar General’s consumables category generated sales of $8,892.5 million, up 3% from the prior-year quarter. Seasonal sales increased 6% to $1,084.3 million, while home products sales rose 3.1% to $523 million. Apparel sales advanced 6.7% to $287.2 million.
Gross margin expanded 65 basis points to 31.6%, benefiting from higher inventory markups, lower shrink and reduced inventory damages, partly offset by increased markdowns and transportation costs.
SG&A expenses, as a percentage of sales, deleveraged 25 basis points to 25.7%. The increase mainly stemmed from higher depreciation and amortization expenses, utilities and property taxes, partly offset by lower incentive compensation.
Dollar General’s operating profit increased 10.8% to $638.5 million. Operating margin expanded 40 basis points to 5.9%.
DG’s Financial SnapshotDollar General ended the quarter with cash and cash equivalents of $1,353.1 million, long-term obligations of $4,563.1 million and total shareholders’ equity of $8,843.3 million.
Net cash provided by operating activities was $716.2 million in the first quarter. Capital expenditures totaled $352 million, including $203 million for improvements, upgrades, remodels and relocations of existing stores, $73 million for new-store facilities, $62 million for distribution and transportation-related projects and $12 million for information systems and technology-related projects.
DG’s Store UpdatesDuring the quarter, Dollar General opened 190 new stores in the United States and five new stores in Mexico. It remodeled 659 stores through Project Renovate and 711 stores through Project Elevate, while relocating six stores.
Management reiterated plans to execute nearly 4,730 real estate projects in fiscal 2026, including about 450 new stores in the United States and 10 new stores in Mexico, nearly 2,000 Project Renovate remodels, approximately 2,250 Project Elevate remodels and about 20 store relocations.
What to Expect From DG in Fiscal 2026?Dollar General raised its fiscal 2026 earnings per share guidance to $7.20-$7.45 from the prior view of $7.10-$7.35. The company continues to expect net sales growth of 3.7-4.2% and same-store sales growth of 2.2-2.7% for fiscal 2026. Capital expenditures are still projected in the $1.4-$1.5 billion range.
Shares of this Zacks Rank #3 (Hold) company have fallen 17.2% in the year-to-date period against the industry’s growth of 8.2%.
Don’t Miss These Solid BetsRoss Stores, Inc. (ROST - Free Report) is one of the largest off-price apparel and home fashion chains in the United States. ROST sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Ross Stores’ current fiscal-year sales and earnings implies growth of 8.2% and 15.6%, respectively, from the year-ago reported figures. ROST delivered a trailing four-quarter earnings surprise of 10.2%, on average.
Casey's General Stores, Inc. (CASY - Free Report) is one of the leading convenience store chains in the United States. CASY currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Casey's current fiscal-year sales and earnings calls for growth of 8.7% and 24.3%, respectively, from the year-ago reported figures. CASY delivered a trailing four-quarter earnings surprise of 20%, on average.
Tyson Foods, Inc. (TSN - Free Report) operates as a leading protein company producing chicken, beef, pork and prepared food products. TSN currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Tyson Foods’ current fiscal-year sales calls for growth of 4.5%, while the consensus mark for earnings indicates a 0.5% increase from the year-ago reported figures. TSN delivered a trailing four-quarter earnings surprise of 18.1%, on average.
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52-Week Range$95.11▼
$158.23Dividend Yield2.05%
P/E Ratio16.25
Price Target$131.27
Dollar General’s NYSE: DG market has hurdles to overcome, but it is only a matter of time until it does. The company's decision to pause share buybacks, focus on growth, and improve the balance sheet is paying off.
Dollar General is reducing debt, invigorating growth, and is on track to sustain improvement through year’s end, and the impact is reflected in the price action. The stock price is at generational lows, trading at a deep discount, while it quietly signals a reversal. The long-term monthly chart shows a nearly complete Head & Shoulders pattern, suggesting robust stock price increases ahead.
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The Head & Shoulders is a powerful pattern reflecting a market in transition. The question is whether this market will transition from a downtrend to an uptrend or remain range-bound. Assuming the worst, Dollar General’s stock price could rebound by as much as 60% from the critical support level and still be within the range. The best-case scenario is that Dollar General advances by 60%, tests resistance at the pattern’s neckline, and then continues to move higher.
The Q1 earnings release and the guidance update for fiscal 2026 gave the market exactly what it needed—proof of accelerating earnings growth—which is a reason to believe this stock will keep increasing over the long term.
Dollar General’s Mixed Results Were Strong Where It Matters MostDollar General issued a mixed Q1 report with revenue falling short of MarketBeat’s consensus estimate. The miss, however, was slim and offset by seasonal factors including weather impact and strong margins. Even so, the $10.8 billion in net revenue is up 3.5% compared to the prior year, only 20 basis points (bps) weaker than expected, driven by store count and comps. Comps increased by 2%, driven by a 1.4% increase in traffic and a 0.5% increase in average check, with strength across categories.
Margin details were the strongest. Dollar General’s inventory rationalization, improving store traffic, and operational improvement drove a 60 bps improvement in gross margin. The improvement was only partially offset by higher expenses, resulting in accelerated earnings growth relative to the top line. Critical details include the 13.3% increase in net income and 12.4% improvement in diluted earnings per share (EPS), more than 625 bps better than expected and compounded by hot guidance.
The guidance is equally mixed and bullish for the market. The company reaffirmed its full-year revenue targets despite a weak Q1, underpinned by expectations of 2.5% comp-store growth and wider margins. While the revenue target was reaffirmed, management raised its full-year earnings target by 10 cents at the midpoint, putting it about 10 cents above consensus. The likely outcome is that Dollar General continues to gain traction and outperforms as the year progresses.
Dollar General’s Balance Sheet Strengthens: Investors Gain ValueThe only downside to Dollar General’s strategy is its pause in share buybacks, implemented to preserve capital. The upside is that cash flow is improved, the cash balance is growing, debt is falling, equity is rising, and dividends are still paid. The Q1 result was a nearly 14.75% equity gain, which more than offset the slight rise in share count. The likely outcome for fiscal 2026 is that Dollar General continues to gain traction, driven by its growth reinvigoration and balance sheet strength, and eventually resumes buybacks, possibly as soon as next year. The dividend is safe, amounting to less than 40% of earnings.
Overall MarketRank™89th Percentile
Analyst RatingHold
Upside/Downside14.1% Upside
Short Interest LevelHealthy
Dividend StrengthModerate
News Sentiment0.69 Insider TradingN/A
Proj. Earnings Growth7.99%
See Full Analysis
The initial analyst response following the release was cautious, but suggests a turning point is at hand. The first update to be released was a reaffirmed rating and price target from Telsey, which pegs the stock at Market Perform with a $140 price target. The rating and target align with broader analyst sentiment, which pegs the stock as a Hold with a 41% Buy-side bias and a $140 price target, implying a 30% upside over the subsequent 12 months. Institutions are likewise bullish, having accumulated over the trailing 12 months and owning more than 90% of the stock.
Dollar General’s primary risk is high gas prices and inflation, which put pressure on its core consumer. While trade-down economics are helping growth today, rising inflation continues to erode spending power in the core demographic and threatens to undermine the outlook. Meanwhile, big-box competitors like Walmart NASDAQ: WMT continue to gain traction in the dailies and consumables categories. The primary catalysts for this stock include lower oil prices and interest rates. Either will take pressure off consumers throughout the stack. In the meantime, DG will continue leaning into store count expansion, remodels, and relocations.
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Dollar General Corp (DG) Q1 2026 Earnings Call Highlights: Strong Sales Growth Amid Economic Challenges Dollar General Corp (DG) reports a 3.4% increase in net sales and a 12.4% rise in EPS, driven by strategic initiatives and robust customer traffic. Summary
Net Sales: Increased 3.4% to $10.8 billion.Same-Store Sales: Increased 2%, driven by customer traffic growth of 1.4% and average basket growth of 0.5%.Gross Profit Margin: 31.6%, an increase of 65 basis points.SG&A as a Percentage of Sales: 25.7%, an increase of 25 basis points.Operating Profit: Increased 10.8% to $638.5 million, with a margin of 5.9%.Net Interest Expense: Decreased to $47.2 million from $64.6 million.Effective Tax Rate: 24.9%, up from 23.4% in the prior year.EPS: Increased 12.4% to $2.Cash Flow from Operations: $716.2 million.Merchandise Inventories: $6.6 billion, flat compared to the prior year.New Store Openings: 190 new stores in the US.Dividend: Quarterly cash dividend of $0.59 per share for Q2 2026.
Release Date: June 02, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points Dollar General Corp DG reported a 3.4% increase in net sales to $10.8 billion for the first quarter of 2026.Same-store sales increased by 2%, driven by a 1.4% growth in customer traffic and a 0.5% increase in average basket size.The company achieved a gross profit margin of 31.6%, an increase of 65 basis points, due to higher inventory markups and lower shrink and damages.Dollar General Corp (DG) saw significant growth in its Value Valley program, with an 18.4% comp sales increase, highlighting strong performance in health and beauty.The company is expanding its delivery options, contributing approximately 70 basis points to comp sales growth, with 80% of orders delivered in one hour or less. Negative Points Higher fuel costs negatively impacted results, although strong operating margin expansion offset some of this impact.The core customer remains financially constrained due to higher fuel prices and reductions in SNAP benefits.SG&A expenses increased by 25 basis points as a percentage of sales, driven by higher depreciation, utilities, and property taxes.The effective tax rate increased to 24.9% from 23.4% in the prior year, primarily due to the expiration of the Work Opportunity Tax Credit.Dollar General Corp (DG) anticipates modest SG&A deleverage for the full year 2026, even as it plans to accelerate investments in key initiatives. Q & A Highlights Q: Todd, could you elaborate on the consistency of comps despite the backdrop with positive comps? Have you seen any change in trends in May to kick off the second quarter? And how do you believe gas prices, if they remain elevated, will impact your results?
A: Todd Vasos, CEO: We started Q1 with negative comps due to store closures from severe weather, but saw strong performance in the remaining weeks. This trend continued into May, indicating a strong start to Q2. Elevated gas prices have historically led to increased trade-in from higher-income customers, and we are seeing this again. We are focusing on value and convenience to capitalize on this trend, with targeted promotions and maintaining a strong $1 price point.
Q: Are you seeing evidence of increased competition in the consumable retail space, and how do you expect this to play out over the next few quarters?
A: Todd Vasos, CEO: Our promotional activity is proactive and targeted, not reactive. We are focusing on value, which is resonating with customers across all categories, including non-consumables. We expect others may try to catch up, but our strong everyday pricing and targeted promotions should continue to drive traffic and growth.
Q: Could you help us understand the cadence of margins as you start to lap tougher shrink comparisons, and what gives you confidence in achieving long-term gross margin targets?
A: Donny Lau, CFO: Q1 gross margin improved by 65 basis points, driven by higher markups and lower shrink and damages. We expect continued improvement in shrink and damages, along with growth in our DG Media Network and other initiatives. These factors give us confidence in achieving our long-term gross margin targets.
Q: How do you view the potential for top-line growth to normalize closer to 3% versus the 2% seen recently?
A: Todd Vasos, CEO: We are confident in our ability to drive top-line growth within our long-term framework of 2% to 3%. The balance of consumables and non-consumables, along with our delivery initiatives, supports this growth. Our delivery program is highly incremental and profitable, contributing significantly to our comp sales growth.
Q: Can you discuss the impact of $1 items on basket size and labor hours, and how you manage this with increased volume?
A: Todd Vasos, CEO: The $1 price point is an add-on to the basket, especially at the beginning and end of the month. It helps customers balance their budgets and is a key part of our value proposition. We manage labor hours effectively to handle increased volume without compromising efficiency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
There's a lot of pride that comes with working hard for your money, but the ultimate goal should always be to make money in your sleep. There are many forms of passive income, but the easiest form for most people is through dividends. All it takes is purchasing shares of dividend-paying stock, regardless of the size of the purchase.
If you're looking for two stocks that can provide a lifetime of passive income, the following two options are great choices. They both approach dividends differently, but have a track record of being shareholder-friendly and prioritizing dividend payouts.
Image source: Getty Images.
1. Realty Income Realty Income (O +1.23%) isn't your typical company; it's a real estate investment trust, better known as a REIT. A REIT is a company that owns and operates income-producing real estate, ranging from office to residential to hospitality to healthcare to data centers, and more.
Realty Income owned 15,571 properties at the end of the first quarter (Q1), with most leased to grocery stores (11% of its collected rent), convenience stores (9.4%), and home improvement stores (6.4%).
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The company's business model is unique (and lucrative): It buys the real estate, rents it out to companies, and those tenants are responsible for paying the property taxes, insurance, and general maintenance. This contrasts with most other rental cases, where the landlord would be responsible for them.
Who Realty Income leases to matters a lot. Its tenants aren't seed-round start-ups; they're typically businesses in industries that thrive regardless of economic conditions, providing Realty Income with reliable rent income and keeping its vacancy rate low. Its top three clients are Dollar General, 7-Eleven, and Walgreens.
Because REITs are structured, Realty Income is required to return 90% of its taxable income to its shareholders. It has a monthly dividend, which works well for those who want their passive income more frequently. Depending on how much you eventually invest in it, its payouts can work somewhat like paychecks.
O Dividend Yield data by YCharts
Realty Income routinely has a high dividend yield, but its consistent increases make it a better long-term investment. In March, Realty Income announced its 114th consecutive quarterly dividend increase, and I expect this streak to continue for the long haul.
2. Procter & Gamble Procter & Gamble (PG +0.86%) (P&G) is one of the more surefire dividend stocks on the market. It's a Dividend King (a company with at least 50 consecutive years of dividend increases), having increased its dividend for 70 straight years -- the fifth-longest streak on the market.
The key to P&G's sustained success is selling products that sell regardless of economic conditions. It owns household-name brands such as Tide, Pampers, Crest, Bounty, Tampax, Gillette, Old Spice, and dozens of others. Regardless of whether the economy is flourishing or in a recession, people have to brush their teeth, wash their bodies, clean their clothes, clean their homes, and keep up with feminine care.
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At its size, P&G won't be a company that consistently grows revenue by double-digit percentages, but it'll be a reliable cash cow. In its most recent quarter (ended March 31), P&G generated $21.2 billion in sales, up 7% year over year. Its operating cash flow (cash from its core operations) was $4 billion, more than enough to cover the $2.5 billion in dividends it paid out in the quarter.
PG Revenue (Quarterly YoY Growth) data by YCharts
You don't invest in P&G in hopes of "Magnificent Seven" stock-like returns; you do it because you know you never have to second-guess its attractive dividend. Its current dividend yield is nearly 3%, a bit above its 2.5% average over the past five years. It's a two-for-one benefit: an above-average dividend yield and an all-but-guaranteed annual increase.
Part of having passive income is not having to think too much, and P&G's stock (and dividend) lets you avoid just that.
HomeIndustriesRetail/WholesaleEarnings ResultsEarnings Results‘This pressure has been more pronounced on customers in rural communities as they work to minimize trip distance,’ discount retailer’s CEO saysPublished: June 2, 2026 at 4:40 p.m. ET
As the Iran war drives up gas prices, retailers like Walmart have said consumers are buying less gas per trip to the pump. Now, signs are emerging that lower-income and rural shoppers are buying less food — in part because long drives are getting too expensive.
Discount chain Dollar General DG, which draws a lot of lower-income consumers who have been hit harder by the past several years of inflation, said Tuesday that as average gas prices have climbed above $4 a gallon, more of its core shoppers are pulling back.
Dollar General’s core customers are cutting back on food purchases and other household expenses due to rising gas prices and reductions in SNAP benefit payments, CEO Todd Vasos said Tuesday (June 2).
“This pressure has been more pronounced on customers in rural communities as they work to minimize trip distance and make trade-offs in their search for everyday affordability and value,” Vasos said during the company’s first quarter earnings call.
Dollar General is meeting the needs of these and other customers with a combination of value and convenience, Vasos said. He highlighted the company’s 21,000-store footprint, growing delivery presence, pricing position that is within three or four percentage points of mass retailers, and selection of more than 2,000 items at or below the $1 price point.
During the first quarter, Dollar General saw year-over-year increases of 3.4% in net sales, 2.0% in same-store sales, 1.4% in customer traffic and 0.5% in average transaction amount. Its same-store sales included growth in each of the company’s four categories: consumables, seasonal, apparel and home products, according to a Tuesday earnings release.
Vasos said during the call that the company also saw growth in customer penetration across all income cohorts, including low-, middle- and high-income segments, as an increasing share of consumers seek value.
“Notably, across these cohorts, the largest increase in customer count came from the highest-income segment, which earns more than $100,000 annually, contributing to a significant increase in trade-in customer households during the quarter,” Vasos said.
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“We know that value and convenience are always important to our customers, but even more so right now,” Vasos added.
The Federal Reserve Bank of New York published research Wednesday (May 27) that said lower-income Americans are facing high levels of economic insecurity and financial strain.
“We find a remarkable increase in food insecurity, particularly among lower-educated and lower-income households and households with young children,” New York Fed researchers wrote.
The latest Consumer Price Index report from the Bureau of Labor Statistics, released May 12, showed inflation rising 3.8% year over year in April, while prices increased 0.6% month over month, marking the strongest monthly inflation gains since October 2022.
Key Takeaways DG posted 2.0% same-store sales growth, driven by a 1.4% traffic increase and a 0.5% ticket gain.DG raised 2026 EPS guidance to $7.20-$7.45 and expects 2.2%-2.7% same-store sales growth.DG said delivery added 70 bps to comp growth and completed 1,370 remodels during Q1. Dollar General Corporation (DG - Free Report) used its first-quarter 2026 earnings call to make a forward-looking case centered less on the headline beat and more on execution. Management stressed that traffic growth, margin expansion and tighter inventory control offset weather disruptions and higher fuel costs.
That message mattered because the company also raised its full-year earnings outlook, while using the call to argue that its value positioning, delivery buildout and remodel program are gaining traction in a pressured consumer environment.
Dollar General Sees Pressure Drive TrafficChief executive officer Todd Vasos said the quarter showed Dollar General’s ability to serve a more financially constrained shopper while also pulling in higher-income trade-in customers. He highlighted same-store sales growth of 2.0%, driven by a 1.4% increase in traffic and a 0.5% rise in average ticket.
Vasos said all four merchandising categories posted positive comparable sales for the fifth straight quarter, with non-consumables again outpacing consumables. He also said March benefited from the Easter shift, while February was hurt by winter storms and temporary store closures.
A notable call theme was trade-in behavior. Vasos said customer penetration rose across income groups, with the biggest increase coming from households earning more than $100,000, while core lower-income shoppers remained under pressure from fuel prices and reduced SNAP benefits.
DG Leans on Margin and Inventory GainsChief financial officer Donny Lau framed the quarter as proof that multiple margin initiatives are working at once. Gross margin rose 65 basis points to 31.6%, helped by higher markups, lower shrink and lower inventory damages, partly offset by higher markdowns and transportation costs. Operating margin expanded 40 basis points to 5.9%.
Lau said shrink mitigation remained a major contributor, with shrink improving 28 basis points from a year earlier, even against a tougher comparison. He also pointed to better in-store execution on damages and supply chain productivity as support for the company’s longer-term margin framework.
The financial backdrop was solid enough to support an earnings beat despite a revenue miss. DG reported earnings per share of $2.00, topping the Zacks Consensus Estimate of $1.89 by 6.06%. Revenues of $10.79 billion missed the Zacks Consensus Estimate of $10.82 billion by 0.33%. Merchandise inventories were essentially flat year over year at $6.6 billion and down 1.6% on a per-store basis.
Dollar General Raises 2026 ViewManagement raised full-year 2026 earnings guidance to $7.20 to $7.45 from $7.10 to $7.35. Lau said the higher range reflects first-quarter outperformance, the balance-year outlook and a lower expected tax rate of about 24.5%.
The company now expects net sales growth of 3.7% to 4.2% and same-store sales growth of 2.2% to 2.7%. Capital spending guidance remained unchanged at $1.4 billion to $1.5 billion, and the outlook still assumes no share repurchases this year.
Lau also said the guidance excludes any effect from potential tariff refund payments. He acknowledged continued uncertainty around consumer behavior and elevated fuel costs, but said management still sees more gross-margin tailwinds than headwinds over the rest of the year.
DG Builds Around Delivery and RemodelsBeyond the quarter, management used the call to emphasize initiatives designed to widen the company’s convenience advantage. Chief operating officer Emily Taylor said delivery sales contributed about 70 basis points to comparable-sales growth in the quarter, with larger baskets and strong repeat usage supporting the economics.
Vasos said the company is now delivering from about 18,000 stores through myDG and third-party partners. Taylor added that most orders reached customers in an hour or less, which management sees as a differentiated proposition in rural markets.
Store refreshes were another focal point. Dollar General completed 659 Project Renovate remodels and 711 Project Elevate remodels in the quarter, while maintaining its target for 2,000 Renovate and 2,250 Elevate projects for the year. Management continues to target roughly 6% annualized comparative sales lift from Renovate and 3% from Elevate.
Dollar General Defends Promotions in Q&AAnalyst questions focused heavily on the durability of traffic gains and whether a more promotional retail backdrop could pressure profitability. Vasos told analysts from UBS and Barclays that the company’s added promotions were planned, targeted and proactive rather than reactive, with an emphasis on supporting the core customer and retaining newer trade-in shoppers.
Management also pushed back on the idea that sharper pricing activity signals weakening fundamentals. Vasos argued that Dollar General already holds a strong everyday value position and said the $1 price point, including Value Valley, remains central to both customer acquisition and basket-building behavior. He said Value Valley comparable sales rose 18.4% in the quarter.
Questions from Bernstein and Piper Sandler pressed on margin durability as shrink comparisons get harder and fuel stays high. Lau said the company expects continued, though more modest, gross-margin improvement through the year, supported by shrink, damages, media network growth, category management and supply-chain efficiencies.
DG Leaves the Call With a Clear PlaybookThe overall tone of the call was confident but measured. Management repeatedly tied the quarter’s performance to controllable execution rather than a friendlier backdrop, emphasizing value, convenience and operational discipline as the core levers for the rest of 2026.
Just as important, executives used the Q&A to reinforce that the company sees room to grow sales, traffic and margins at the same time, even with macro pressure still evident across its customer base.
Zacks Signals Point to Mixed Near-Term TraitsDG carries a Zacks Rank #3 (Hold), along with a Value Score of A, Growth Score of A, Momentum Score of F and VGM Score of A. Under Zacks methodology, a stronger Style Score can help identify attractive value and growth characteristics, while the weak Momentum Score points to less favorable price-trend support.
A Zacks Rank #3 does not carry the same favorable setup as a Zacks Rank #1 (Strong Buy) or 2 (Buy), even when Style Scores are strong. The combination suggests balanced fundamental traits but a less decisive near-term signal, and that rank can still change as earnings estimate revisions adjust after the quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Tyler Crowe, Matt Frankel, and Lou Whiteman discuss:
Dollar General’s earnings.Has Dollar General turned the corner?Investing in turnaround stocks: What to look for?Citron Research’s Andrew Left found guilty of securities fraud.The value of short-selling research.The “ickiness” of the short-seller business model.Listener question: Are crowdfunded real estate funds worth it? What to look for?To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.
A full transcript is below.
This podcast was recorded on June 2, 2026.
Tyler Crowe: We're talking short sellers and turnarounds today on Motley Fool Hidden Gems Investing. Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe, and today I'm joined by longtime Fool contributors, Lou Whiteman and Matt Frankel. We're going to be getting into short sellers, specifically short-selling research firms, after the court decision that came down on Citron Research earlier yesterday. We're also going to look at investor questions related to real estate on the private side, not necessarily reads that we normally talk about on a publicly traded entity show.
But first, we're going to start with Dollar General. I wanted to bring this one up specifically because it's been a turnaround story for several years. It's not the most headline-grabbing company. But during the 2010s, Dollar General was one of the best-performing stocks. It handily beat the S&P 500. Companies that we think of now like Mag 7 companies like Microsoft and Alphabet, Dollar General was beating it. That came to a crashing halt right around 2022 as trouble started to pile up for various reasons, and the company's been trying to get its act together for a while now. This morning, it just reported earnings, and the numbers said they beat expectations and raised guidance, and yet the stock is down about almost 3% as we're taping this. Matt, was this a good result, or was it just beating bad expectations for what is now a downtrodden stock?
Matt Frankel: Well, Dollar General, you're right. They beat expectations on earnings. On revenue, they missed expectations a little bit. It wasn't all good. Same-store sales, for example, grew 2% year over year. That's less than the rate of inflation, so on a real basis, they actually lost same-store sales. On the other hand, their margins look good. Gross margin rose 65 basis points, net income increased by 13%, and as you mentioned, earnings beat expectations. It missed slightly on the top line, beat on the bottom. I'm not shocked that the stock is under pressure. The company is making good progress on its plan to renovate and improve its existing stores, which is a big cornerstone of their turnaround plan. They did 1,400 of them in the first quarter alone, they're aiming for a little over 4,200 for the entire year. They continue to open stores when they see opportunities. Almost 200 new stores were opened during the first quarter. They maintained their revenue guidance for the full year, but they raised their earnings guidance. I'd say things are going OK. They're not going great, but they're going OK.
Lou Whiteman: Maybe the market debate is in the word good in good progress. Because, yes, there's definitely making progress here. This is a promising start to what figures to be a long-term turnaround. They were beaten, rightfully so, I may add, and the market right now, I don't think they want to celebrate just one quarter of a turnaround. They have an ambitious plan. There's nothing in this quarter to suggest that there's anything wrong with the plan, but competition is intense here. In retail, there is no guaranteed winner. You are not entitled to continue to exist, so there is real downside risk. Turn around, still early days. I think you give credit where credit is due, but I think the market's right to be cautious here and not to just be cheering just because of one quarter's results.
Tyler Crowe: I feel like the three of us have been in the same experience here for a while, where I've been to a few value investing conferences over the past few years, and I think I've heard so many Dollar General pitches at these value investing conferences. I feel like I could set my watch to it and almost do the whole pitch by memory now. It all had struck the exact same chords. It was former CEO Todd Vasos is now back in charge again after, that 2020, 2010 run-up, and he's the one in charge again. The stuff that's a problem, it is fixable. If you focus on the current store fixing, like you were talking about, Matt, in the most recent numbers, instead of really trying to blow out your store account, which was part of the growth’s narrative and why it was so successful, all these things happened, and boom, we're back at two times price-to-sales ratio, eight times book value. Some of these things are coming true. Sales continue to grow, margins are improving. But at the same time, that valuation standpoint, it hasn't come anywhere close to it. We're still less than one times sales. I think book value is something like 2.5 times book. The valuations way different.
This is the challenge, in my opinion, of investing in turnarounds, and I wanted to use Dollar General as a good example here, but we could have done Advance Auto Parts or the 15 other long-term turnarounds that sometimes have not quite gotten off the ground. It's not just a bet on the fundamentals of the business returning. It's also the narrative that drives that valuation of what people think about it. I know I certainly have touched the hot stove a couple of times. I don't even know if I can mention some of them because they're so small these days that I think we can move the stock, so I don't even want to mention them because they're in such bad shape. But with that in mind, one, if you want to share any turnaround bets that you made that didn't go awry or did, and what advice would you give to investors when it comes to actually investing in these turnaround ideas or fallen angels like Dollar General?
Matt Frankel: Of course, every turnaround story is different. But there are some common themes. For me, leadership is the most important variable. I typically want a CEO that's done it before, not that's run the company before, but has executed a turnaround before. Unity Software, you asked for an example, is one that I can think of off the top of my head. Their current CEO Matt Bromberg, formerly led the turnaround at Zynga, the gaming platform, so he's done it before. The balance sheet needs more than enough money to execute on the turnaround. You don't want to be raising capital while the company's down. I'll almost never invest in a turnaround from the start. I want at least some evidence, a few quarters of numbers moving in the right direction that show that it's working. I want to see things like same-store sales growth and after inflation, like in Dollar General's case, margin trends, customer accounts growing, things like that. That's what I look for.
Lou Whiteman: First off, I think it's so important to look at the competition just as a society. It’s definitely true here is that, look, a company that has fallen from grace or lost the customer’s eye, if you’re a consumer-facing company, you can execute very well, and it can be hard to get back on the radar, get back in good graces with the customer. I think that is a huge wildcard that you have to look out for here. But generally speaking, Tyler, I think you hit on it. Narrative is so important. We are surrounded by data. The market knows everything that's going on at any given time these days. The hard part is knowing when the market will care about the data. A lot of sharp moves we see, and this is a Dollar Tree thing. This is anywhere, but a lot of sharp moves, it's not because there's some new surprise. It's just we suddenly started caring about something we already knew about. Look at the SaaS apocalypse. We've known what AI wanted to do forever, but suddenly, this was cutting 50% off the price of the stocks because suddenly we actually cared about it. It was in our consciousness. In a turnaround story, the only antidote to narrative is patience. If the turnaround is working, if the data looks good, the market will catch on eventually. But that eventually can take a long time. It's really hard to know when, so patients can be needed.
Tyler Crowe: I find it funny because you said Dollar Tree instead of Dollar General, but I actually feel like this whole segment could have been done with Dollar Tree instead of Dollar General. We might have come to the same conclusions. But before I go, anybody want to touch the hot stove, like a turnaround that worked for you in your portfolio, one that flamed out, didn't quite work out?
Lou Whiteman: I'll do one of each and that bottom at the same time, which is, again, to show you that they don't all work out. I bought Garrett Motion and Simply Good Foods at the same time. One of them, I think, is a 3X now, and one of them is down 60%. I like both equally, going in.
Matt Frankel: Tyler, you're betting on Transocean's turnaround with me, so I'll just leave it at that.
Tyler Crowe: Coming up after the break, we're going to get into the muddy waters of short-selling.
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Tyler Crowe: Let's talk about short-selling and short-seller research firms in general. This isn't a topic we explore much here because I'm using the Royal "we" of The Motley Fool, not necessarily the three of us. We don't normally short stocks. Yes, me, I sometimes use options like put options for income or buying a stock at a set price instead of doing price limits. But I think I can speak for the three of us when we say I don't think any of us go out and say, the company's no good. I'm short of stock or short stocks in our portfolio. Matt, Lou, do either of you guys do that?
Matt Frankel: I don't want to say that I've never shorted a stock. I'm sure back in my early days, before I knew how to invest, I did. But I can't really remember the last time. On occasion, I'll set up option spreads or something like that that could profit if a stock I consider frothy were to go down. But even that's rare.
Lou Whiteman: I stopped a long time ago. It's just too much work.
Tyler Crowe: The work is key here. We’re talking about this one specifically because yesterday, Andrew Left, of the short-selling research firm Citron Research, was found guilty of securities fraud. It was actually 13 of 17 counts, and I think one of them carries a maximum prison sentence of 25 years. I don't know if he's going to get 25 years, but there is some real penalties going on here. Basically, the thesis on the court case was he was using his followership on social media and elsewhere to disseminate his research and manipulate stock prices to profit from it. Now, I wanted to bring this to the table because I have some real conflicting thoughts about this as an investor, and also what we do in financial media. For all the flak that most investors give to short sellers for a myriad of reasons, some good, maybe some not, I think there's some real value to short sellers, and short-seller reports, like the ones that Citron Research have done in the past. Do either of you agree with me here, or am I standing on an island?
Lou Whiteman: Absolutely. No, I'm 100% pro short sellers. I will say they vary in quality, just like longs, that's not exclusive to the short. I don't know, and we'll get into it, I don't know if I can be pro-Andrew Left here, but definitely short sellers need to exist.
Matt Frankel: I would agree with that. There's a solid case to be made that short sellers are a vital part of the stock market. There’s a lot of academic research out there that shows that short sellers improve price discovery, reduce the average duration of miss pricing, i.e, bubbles, and cause less impactful crashes than otherwise would happen. Short sellers have legitimately been the first to identify fraud many times. Think of Nikola, for example.
Tyler Crowe: To that point, too. Lou, like you were saying, not necessarily the biggest fans of Andrew Left, but Citron Research were some of the first ones to point out with all the accounting shenanigans that were going on at Valiant Pharmaceuticals. I think it was back in 2015. I think within days of that Citron Research report, Valiant was making drastic changes to its business, talking about dissociating itself from some of the pharmacies that it was working with because there was accusations that they were using those pharmacies for overcharging. It was a pretty clear-cut fraud case that Citron brought to everyone's attention here. It was good and important work. To your point, Matt Nikola was a great one. While this technically wasn't a short report, John Carreyrou's work on Theranos was in that same spirit. I think, had Theranos gone public without some of that work, I'm sure they would have made it even worse. We the market, we sometimes need people on the lookout for the bad stuff for the Valiants, for the Nikolas and stuff like that, or otherwise, they can perpetuate and get even worse. Now, with all of that said, and this is where it starts to get conflicting, there is something that's definitely icky about the business model for many short sellers. The verdict during this Citron Research court decision is where some of that icky business practices started to come to light, and I think that's why we're like don't really know if I want to stand up for Andrew Left here.
Matt Frankel: The big takeaway, it's not that publishing short research is inherently bad. It's not. But misleading investors is, and it's not just Citron that does it. Muddy waters, which you mentioned earlier in the episode, at least they say this, but they include a line in every short report that says, Upon the publication of each report, we intend to begin covering a substantial majority of our short positions. They go on to say, “You agree and understand that by the time you read a report on this website, we may be covering or have already covered, i.e., bought back our short position.” This is where I have a problem. They're aiming to profit at publication and don't plan to stick around to see if their short thesis was actually right. Always read short reports on stocks you own. Don't get me wrong. It's always worth listening to the bear case to every stock you own. Even reports where the seller just aims to make a quick buck, like those, they often contain real concerns that are worth investigating. Now, Citron's general process, and this came out in the trial, was to identify a target, quickly establish a short position in it, coordinate some timing, and publish an attention-grabbing claim, either a tweet or an article, watch retail investors panic and react, sending the stock lower, and then cover into the short without disclosing it in most cases.
Lou Whiteman: One real big objection to what Matt said. I don't think that there is anyone who honestly believes that every person that goes on CNBC, Bloomberg, or something, and says, I think such and such is great is committing to a timetable. If anything, Matt, like you say, at least the shorts admit this, there is nothing stopping anyone from saying on a tweet, on television or anything, I think Stock A is going to the moon, see it go up 5% and sell it right away. There are, I should say that for some of us, like some companies choose to put restrictions on what people can say and then act on. Motley Fool does that. I'm all for it because I agree that's not ethical, but to say that this is just some short thing, that they say something about a company and then sell off, that happens all of the time, and it feels like crocodile tears to get too caught up on it, just shorts do it. What I have a problem with, and again, I want to be careful because, I guess, the jury has ruled, but it is still allegedly, allegedly from the prosecution, is the idea that Left was basically marketing his reputation to sympathetic hedge funds and coordinating takedowns. That's where you sort of cross the line. There's email quotes about, all I have to do is go on, say something, and it'll be like taking candy from a baby. I do think that there should be some standard of conviction to your words that you should actually be going in with a thesis. But look, if my thesis is that this company is overvalued, and I think it's going to go down from here. I say that loudly enough, and it goes down. Whether it takes 20 minutes or two years, why shouldn't I cover there? The act that they do that just because they're on the downside, betting on things going down seems just as fair to me as betting things go up. I just don't think you should be conspiring with other people to manipulate stock prices, which is what was implied with Left here.
Tyler Crowe: I'm going to do a shameless plug here for the Motley Fool. You know what? It's our podcast. I like to do that sometimes. We get some stocks right. We get some stocks wrong. But one of the things that you were mentioning, we do have a pretty robust disclosure and no trade policy. If we know that a stock is going to be recommended weeks in advance, we're not allowed to trade it. If we talk about or write about any of the stocks that you hear us talking about on this podcast, we can't trade them for multiple days, and that's part of the process. I think at least for me, and I'm sure that you two agree on this to a certain degree, it's one of the reasons I've enjoyed working for The Motley Fool for a long time is because we get some things right. We get some things wrong. We can't say that we're perfect, but I think there's a level of transparency and disclosure when it comes to things like this that separates us to a certain degree from the Citron Research, publishing something and then immediately trading on it afterwards.
Lou Whiteman: It should be said, Tyler.
Tyler Crowe: Go ahead.
Lou Whiteman: That's more the exception than it is the rule, which is why all of the hand-waving about shorts, this happens unfortunately a lot on both sides on Wall Street. If we really care about it, we should really start looking at every tweet pumping a stock as well.
Tyler Crowe: Well, there's only so many Wall Street ethics episodes we can do here on the podcast. But every once in a while, we're going to do our standing on our soapboxes, and this is probably one of them. Coming up after the break, we'll do listener questions. That's. Hey, everyone, quick reminder, if you want to get your questions in, we love answering them. Just send them over to [email protected]. That's [email protected]. The three requests we always ask is number one, keep it Foolish. Two, keep it short enough if I can read on air, and three, we can't give personalized advice, so always ask generic questions. What would an investor do, or what do you think about a stock? We can't necessarily tell you what you should do with your portfolio. We don't want to get in trouble with the SEC, like Andrew Left did.
With that in mind, here is the question from Matt. Hi, Motley Fool team. I have questions about whether syndicated crowd-funded private equity and real estate should have a place in my portfolio. Basically, the rest of it goes, Could you share your thoughts on how to safely invest in and evaluate these funds? What specific red flags or metrics should I look out for as I compare for them? Thanks for all the great content. Lou, I want to start with you, private equity, real estate. This was a really popular thing. I think 2019, 2020, where a lot of the regulations change where instead of having to be what was called an accredited investor, where you had to have enough either money or income to invest at a certain level, they brought down those thresholds and made, what they said was democratizing private equity. It's had some mixed results, and I think that's what we're getting at here. When you're looking at this particular part of the market, what are you looking for?
Lou Whiteman: I get the appeal, and you don't have to go far to find the appeal because they market the heck out of it. Diversification, there's some tax benefits, maybe, depending on what you're doing here. But these are not going to be part of my portfolio, and I'll tell you real simple why. One thing, you're signing over a lot of control to whoever's managing this. Do they have a good track record? Have they navigated downturns? If it's real estate, are the underwriting assumptions realistic? There's just a lot that you were putting in someone's hands, so you better know them. But the big thing is, this all matters because you're typically locked in, and your capital is locked there for years on end. You are in, you were part of this, heck or highwater however it goes. If you do want to do this, spend a lot of time on due diligence. The reason this is for accredited or supposedly sophisticated investors is that there aren't a lot of safety nets here. There's a lot of homework that is asked of you. Do that homework. Spend the time breaking down the manager. Look at the plan. Look closely at the fees because a lot of these are designed to get the manager rich, not you. Shop around, just do your homework.
Tyler Crowe: Matt, I'll let you do the final words here. But in a previous life for me at Motley Fool, I did some work on some scoring and rating of crowdfunded real estate funds. In my assessment, the better ones were, at best, you get a percentage point or slightly more on a net basis after fees than publicly traded rates, and you had to lock up your capital in these illiquid securities. At worst, they were launderers of fees that basically they could pitch massive yields and huge growth to the investors, but they just bought and sold a bunch of stuff within the portfolio to rack up transaction costs and management fees, and to your point, Lou, just enriching the management. That was the worst examples of it. In some ways, even just buying questionable real estate just for the sake of buying stuff, again, for the fees. I greatly appreciated the concept of bringing a lot of these funds, both on the accredited and unaccredited version. It was trying to make assets that were typically reserved for higher-net-worth individuals more accessible to all of us. I can understand the appeal, and I do sympathize with that. But the regulations on this part has just been like the Wild West, and really, you're throwing individual investors to the wolves here. The reason that this has been reserved for the rich is because they could hire an army of analysts and lawyers to look over this stuff, and, us weekend hobbyists don't really have the assets to really do that.
Matt Frankel: I'd stay away, and this comes from someone who invested in several of these private crowdfunded real estate deals over the past five or six years. The numbers are not in your favor. This was an analysis, over 50% of deals listed on the CrowdStreet platform, for example, failed to meet their targets. More than 10% went to zero. Several platforms have failed completely in the past five years, and total documented investor losses across the sector were more than $400 million across just the major platforms since 2020. Now, I'm not saying real estate crowdfunding is a scam, it's not. But the marketing really oversells the expected returns in almost all cases.
Tyler Crowe: Apologies to Matt, looking for advice on this, but I think the best advice we can give for a lot of these things is maybe it's best to stay away and stick to the publicly traded stuff. Like I said, maybe it's one or two percentage points lower for publicly traded bricks, but you get a lot of the advantages of liquidity and transparency.
As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for our guest, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards, and it's not approved by advertisers. Advertisements for sponsored content are provided for informational purposes only. To see our full advertising and disclosure, please check out our shows. Thanks for producer Dan Boyd, and the rest of The Motley Fool team. For Lou, Matt, and myself, thanks for listening, and we'll chat again soon.
