Graco (GGG) AI Stock Analysis

• Market Cap: $14.23B
• Dividend Yield: 1.29%
• Average Volume (3M): 659.91K
• Price to Earnings (P/E): 29.5
• Beta (1Y): 0.86
• Revenue Growth: -0.40%
• EPS Growth: -2.50%
• Country: US
• Employees: 4,300
• Sector: Industrials
• Sector Strength: 87
• Industry: Industrial - Machinery
• EPS (TTM): 0.70
• Shares Outstanding: 167,132,860
• 10 Day Avg. Volume: 685,550
• 30 Day Avg. Volume: 659,915
• PEG Ratio: 84.42
• Price to Book (P/B): 5.79
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 25.39
• Enterprise Value/Market Cap: 0.94
• Enterprise Value/Revenue: 1.57
• Enterprise Value/Gross Profit: 11.84
• Enterprise Value/Ebitda: 5.49
• 1Y Price Target: $90.67
• Price Target Upside: 8.53% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 75 Outperform
• Price Target: $94.00 ▲(12.52%Upside)

Graco's overall stock score is driven by its strong financial performance and efficient cash flow management. However, the high P/E ratio suggests potential overvaluation, balanced by moderate technical indicators and a mixed outlook from the latest earnings call. Key strengths include solid profitability and strategic financial management, while challenges in specific segments and margin pressures present risks.

Positive Factors

Customer Satisfaction

The company’s Net Promoter Score has risen, with customers noting access to Graco’s full product portfolio as a meaningful improvement.

Market Position

Graco maintains increased shelf space within its home center channel, positioning it well for a potential residential recovery.

Market Strategy

The One Graco go-to-market realignment is already yielding commercial benefits alongside expected cost savings.

Negative Factors

Revenue Outlook

Upside to its 2025 organic revenue growth outlook for low single digits appears to have diminished.

Trade Policies

Proposed trade policies with China could negatively impact full-year revenue by 1% to 2%.

Graco Business Overview & Revenue Model

Company Description

Graco Inc. designs, manufactures, and markets systems and equipment used to move, measure, control, dispense, and spray fluid and powder materials worldwide. The company's Industrial segment offers proportioning systems to spray polyurethane foam and polyurea coatings; equipment that pumps, meters, mixes and dispenses sealant, adhesive, and composite materials; and gel-coat equipment, chop and wet-out systems, resin transfer molding systems and applicators, and precision dispensing solutions. It also provides liquid finishing equipment; paint circulating and supply pumps; paint circulating advanced control systems; plural component coating proportioners; spare parts and accessories; and powder finishing products to coat powder finishing on metals under the Gema and SAT brands. The company's Process segment offers pumps to move and dispense chemicals, water, wastewater, petroleum, food, lubricants, and other fluids; pressure valves used in the oil and natural gas industry, other industrial processes, and research facilities; and chemical injection pumping solutions for injection of chemicals into producing oil wells and pipelines. It also supplies pumps, hose reels, meters, valves, and accessories for fast oil change facilities, service garages, fleet service centers, automobile dealerships, auto parts stores, truck builders, and heavy equipment service centers; and systems, components, and accessories for the automatic lubrication of bearings, gears, and generators in industrial and commercial equipment, compressors, turbines, and on- and off-road vehicles. The company's Contractor segment offers sprayers to apply paint to walls and other structures; and viscous coatings to roofs, as well as markings on roads, parking lots, athletic fields, and floors. It sells its products through distributors, original equipment manufacturers, and home center channels; and directly to end-users. The company was incorporated in 1926 and is headquartered in Minneapolis, Minnesota.

How the Company Makes Money

Graco Inc. generates revenue primarily through the sale of its wide range of fluid handling equipment and systems. The company operates globally, with its revenue streams divided into three main segments: Industrial, Process, and Contractor. The Industrial segment provides solutions for industries like automotive, aerospace, and electronics, focusing on precision fluid dispensing and finishing. The Process segment serves markets such as oil and natural gas, chemical manufacturing, and food and beverage, offering pumps, meters, and related accessories. The Contractor segment targets the construction and home improvement industries, providing spray equipment for painting, coating, and texture applications. Graco also benefits from strong distribution networks and strategic partnerships that enhance its market reach and customer base. Additionally, after-sales services, including parts and maintenance, contribute to the company's earnings.

Graco Financial Statement Overview

Summary

Graco maintains a robust financial position with strong profitability, prudent balance sheet management, and efficient cash flow generation. The company's performance is marked by stable revenue growth, high margins, and low financial leverage, positioning it well for sustained growth and stability in the Industrial - Machinery sector.

Income Statement

Graco exhibits strong profitability with a consistent Gross Profit Margin around 52-53% over the periods. The Net Profit Margin for TTM is approximately 22.7%, indicating healthy operational efficiency. Revenue growth is stable, with slight fluctuations due to industry cyclicality, but overall showing a positive trend. EBIT and EBITDA margins are robust, indicating effective cost management and operational leverage.

Balance Sheet

The company's balance sheet is solid, with a low Debt-to-Equity Ratio, demonstrating prudent financial management and low leverage risk. The Return on Equity (ROE) is strong, reflecting effective use of equity capital. The Equity Ratio indicates a strong equity base, ensuring financial stability and flexibility in operations.

Cash Flow

Graco's cash flow generation is strong, with a positive trend in Free Cash Flow Growth, demonstrating effective capital management. The Operating Cash Flow to Net Income ratio indicates good cash conversion efficiency. Free Cash Flow to Net Income ratio remains healthy, supporting reinvestment and shareholder returns.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.15B	2.11B	2.20B	2.14B	1.99B	1.65B
	Gross Profit
1.13B	1.12B	1.16B	1.06B	1.03B	854.94M
	EBIT
581.11M	570.10M	646.84M	572.70M	531.32M	391.72M
	EBITDA
662.24M	678.86M	686.59M	641.62M	578.00M	440.43M
	Net Income Common Stockholders
487.98M	486.08M	506.51M	460.64M	439.87M	330.46M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
622.73M	675.34M	537.95M	339.20M	624.30M	378.91M
	Total Assets
2.79B	3.14B	2.72B	2.44B	2.44B	1.99B
	Total Debt
46.96M	40.81M	50.06M	117.03M	217.02M	201.41M
	Net Debt
-575.77M	-634.52M	-487.89M	-222.16M	-407.29M	-177.50M
	Total Liabilities
451.18M	555.08M	497.78M	579.25M	733.86M	704.22M
	Stockholders Equity
2.34B	2.58B	2.22B	1.86B	1.71B	1.28B
Cash Flow		Free Cash Flow
548.05M	514.96M	466.24M	176.23M	323.33M	322.70M
	Operating Cash Flow
628.19M	621.70M	651.02M	377.39M	456.90M	394.04M
	Investing Cash Flow
-321.68M	-342.81M	-185.27M	-226.82M	-153.30M	-99.04M
	Financing Cash Flow
-396.08M	-139.86M	-268.01M	-434.40M	-57.14M	-139.47M

Graco Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 83.54
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GGG, the sentiment is Negative. The current price of 83.54 is below the 20-day moving average (MA) of 84.91, above the 50-day MA of 82.30, and below the 200-day MA of 84.16, indicating a neutral trend. The MACD of 0.38 indicates Positive momentum. The RSI at 46.24 is Neutral, neither overbought nor oversold. The STOCH value of 54.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GGG.

Graco Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ITT	82 Outperform	$11.97B	23.94	19.27%	0.92%	6.99%	23.25%
PNR	78 Outperform	$16.27B	24.92	18.59%	1.01%	-0.42%	3.23%
NDSN	78 Outperform	$12.32B	27.57	15.54%	1.43%	1.98%	-7.66%
GGG	75 Outperform	$14.23B	29.48	20.28%	1.29%	-0.40%	-2.50%
RRX	72 Outperform	$9.40B	39.23	3.69%	0.99%	-10.19%	―
IEX	69 Neutral	$13.79B	28.16	12.73%	1.56%	1.66%	-17.18%
Sector *	66 Neutral	$4.51B	12.22	5.40%	3.63%	4.14%	-12.01%

Graco Corporate Events

Graco Completes Strategic Acquisition of Corob S.p.A.

Graco Inc. has completed its acquisition of Corob S.p.A., a global leader in dispensing and mixing solutions for paints and coatings, for €230 million plus potential additional payments. This strategic move enhances Graco’s presence in the growing paint and coating equipment sector. Corob’s technology and expertise will be leveraged to benefit new and existing customers, expanding Graco’s global manufacturing reach. The acquisition aligns with Graco’s goal of driving growth and innovation in fluid and coatings management.