Global Industrial trades at $26.62 and has moved in lockstep with the market. Its shares have returned 5.1% over the last six months while the S&P 500 has gained 1.9%.
Is there a buying opportunity in Global Industrial, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Do We Think Global Industrial Will Underperform?
We're cautious about Global Industrial. Here are three reasons why you should be careful with GIC and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Global Industrial’s 5.7% annualized revenue growth over the last four years was tepid. This was below our standard for the industrials sector. 
2. EPS Barely Growing
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Global Industrial’s full-year EPS grew at a weak 4% compounded annual growth rate over the last five years, worse than the broader industrials sector.
3. New Investments Fail to Bear Fruit as ROIC Declines
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Global Industrial’s ROIC has unfortunately decreased significantly. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.
Final Judgment
We cheer for all companies making their customers lives easier, but in the case of Global Industrial, we’ll be cheering from the sidelines. That said, the stock currently trades at 16.6× forward P/E (or $26.62 per share). This multiple tells us a lot of good news is priced in - you can find more timely opportunities elsewhere. We’d recommend looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.
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