By: Scott Davis
GWW: 3Q17 Thoughts & Model
Our cycle call is bullish, and so far earnings results support that view. Though early, FAST (Fastenal) had strong top-line results (core growth up 10%) and today GWW had +8% volumes. Importantly, a slow July/Aug accelerated hard in Sept and we are hearing from others that 4Q17 order books are strengthening. GWW stock performance today also tells us a bit about laggards in an upcycle. One of the most powerful upcycle themes has historically been to buy the laggards – mean reversion in upcycles (i.e. rising tide lifts all boats) is the norm. Early prints help answer the question of whether we should be pressing bets on the winners or buying laggards – so far laggards are winning out.