tiprankstipranks
Trending News
More News >
Graco (GGG)
NYSE:GGG

Graco (GGG) AI Stock Analysis

Compare
251 Followers

Top Page

GG

Graco

(NYSE:GGG)

73Outperform
Graco's overall stock score reflects its strong financial performance and effective management, which are slightly offset by technical indicators showing bearish trends and a high P/E ratio suggesting potential overvaluation. The earnings call indicates mixed future outlooks, with positive sales growth but some operational challenges. The company's robust financial management and strategic initiatives, such as share repurchases, provide a solid foundation for stability in the industrial sector.
Positive Factors
Financial Management
Graco has strong free cash flow and a proven ability to opportunistically repurchase shares.
Initiatives
The early benefits of the OneGraco initiative are being realized.
Market Strategy
Graco continues to drive market outgrowth through share and price.
Negative Factors
Earnings Performance
3Q earnings fell below expectations on downside from both revenue and margins.
Market Demand
Softening of NA demand through the quarter, and broad-based green shoots remain elusive amid broad-based weakness and overcapacity in key markets.
Trade Policies
Proposed trade policies with China could negatively impact full-year revenue by 1% to 2%.

Graco (GGG) vs. S&P 500 (SPY)

Graco Business Overview & Revenue Model

Company DescriptionGraco 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 MoneyGraco makes money primarily through the sale of its fluid handling equipment and systems, which are used across various industrial applications. The company's revenue streams are driven by its three main segments: Industrial, Process, and Contractor. The Industrial segment supplies systems and equipment for finishing, spray painting, and coating applications. The Process segment provides solutions for the management of fluids in industrial processes, including sanitary, oil and gas, and chemical applications. The Contractor segment serves the construction and home improvement industries with products such as airless sprayers and texture applicators. Graco's earnings are bolstered by its strong global distribution network, strategic acquisitions, and continuous investment in research and development to innovate and meet the evolving needs of its customer base.

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. These strengths position Graco well for sustained growth and stability in the Industrial - Machinery sector.
Income Statement
85
Very Positive
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
80
Positive
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
78
Positive
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
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
2.11B2.20B2.14B1.99B1.65B
Gross Profit
1.12B1.16B1.06B1.03B854.94M
EBIT
570.10M646.84M572.70M531.32M391.72M
EBITDA
570.10M686.59M641.62M578.00M440.43M
Net Income Common Stockholders
486.08M506.51M460.64M439.87M330.46M
Balance SheetCash, Cash Equivalents and Short-Term Investments
675.34M537.95M339.20M624.30M378.91M
Total Assets
3.14B2.72B2.44B2.44B1.99B
Total Debt
40.81M50.06M117.03M217.02M201.41M
Net Debt
-634.52M-487.89M-222.16M-407.29M-177.50M
Total Liabilities
555.08M497.78M579.25M733.86M704.22M
Stockholders Equity
2.58B2.22B1.86B1.71B1.28B
Cash FlowFree Cash Flow
514.96M466.24M176.23M323.33M322.70M
Operating Cash Flow
621.70M651.02M377.39M456.90M394.04M
Investing Cash Flow
-342.81M-185.27M-226.82M-153.30M-99.04M
Financing Cash Flow
-139.86M-268.01M-434.40M-57.14M-139.47M

Graco Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price83.23
Price Trends
50DMA
82.29
Negative
100DMA
83.52
Negative
200DMA
83.61
Negative
Market Momentum
MACD
-0.13
Negative
RSI
54.31
Neutral
STOCH
87.59
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GGG, the sentiment is Neutral. The current price of 83.23 is above the 20-day moving average (MA) of 78.89, above the 50-day MA of 82.29, and below the 200-day MA of 83.61, indicating a neutral trend. The MACD of -0.13 indicates Negative momentum. The RSI at 54.31 is Neutral, neither overbought nor oversold. The STOCH value of 87.59 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GGG.

Graco Risk Analysis

Graco disclosed 23 risk factors in its most recent earnings report. Graco reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Graco Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
ITITT
82
Outperform
$11.17B21.9119.60%0.95%10.59%27.04%
PNPNR
77
Outperform
$14.93B23.4018.59%1.06%-0.42%3.23%
IEIEX
75
Outperform
$13.71B27.2712.73%1.57%1.66%-17.18%
GGGGG
73
Outperform
$13.65B28.8220.28%1.30%-0.40%-2.50%
71
Outperform
$10.83B24.2416.15%1.59%0.78%-8.42%
RRRRX
66
Neutral
$7.41B37.983.11%1.30%-3.47%
64
Neutral
$4.28B11.805.30%250.74%4.12%-9.02%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GGG
Graco
83.23
2.15
2.65%
IEX
IDEX
181.45
-36.13
-16.61%
ITT
ITT
141.82
14.70
11.56%
NDSN
Nordson
192.84
-69.33
-26.44%
PNR
Pentair
93.29
14.53
18.45%
RRX
Regal Rexnord
111.73
-51.72
-31.64%

Graco Earnings Call Summary

Earnings Call Date:Apr 23, 2025
(Q1-2025)
|
% Change Since: 5.39%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed view with notable achievements in sales growth and cash flow, but faced challenges in the contractor segment and gross margin due to acquisitions and external factors like tariffs in China. The company is actively working on mitigation strategies and has shown strong financial management through share repurchase activities.
Q1-2025 Updates
Positive Updates
Sales Growth and Revenue Achievement
Graco reported first-quarter sales of $528 million, an increase of 7% from the first quarter of last year. Excluding acquisitions, sales grew 3% for the quarter.
Strong Financial Performance
Reported net earnings increased 2% to $124 million or $0.72 per diluted share. Adjusted non-GAAP net earnings were $120 million or $0.70 per diluted share, an increase of 8%.
Robust Cash Flow
Cash provided by operations totaled $125 million, an increase of $6 million from last year. Cash provided by operations as a percent of adjusted net earnings was 104%.
Successful Share Repurchases
The company repurchased 4.4 million shares for nearly $360 million year-to-date.
Positive Segment Performance
Industrial segment sales increased 5% with growth in all regions. Sales in the expansion markets segments increased by 12% with positive momentum in the semiconductor market.
Corab Acquisition Success
Corab has met expectations as integration efforts continue, contributing 6% to sales growth.
Negative Updates
Contractor Segment Decline
Contractor segment sales declined 1% due to continued softness in the home center business and challenging EMEA construction markets.
Gross Margin Pressure
The gross margin rate decreased 150 basis points in the quarter, with acquisitions accounting for 100 basis points of the decline.
Currency Translation Impact
The effect of currency translation reduced sales by 2%.
Challenges in China Market
China accounted for nearly 6% of global revenue and faces impact from tariffs. Mitigation plans include qualifying additional suppliers and moving component manufacturing to US factories.
Company Guidance
In the first quarter of fiscal year 2025, Graco Inc. reported sales of $528 million, marking a 7% increase from the previous year. Excluding acquisitions, which contributed 6% growth, organic sales grew by 3%, although currency translation reduced sales by 2%. Net earnings increased by 2% to $124 million or $0.72 per diluted share, with adjusted non-GAAP net earnings at $120 million or $0.70 per diluted share, an increase of 8%. The gross margin rate decreased by 150 basis points due to higher product costs and lower factory volume, with acquisitions accounting for nearly 100 basis points of this decline. Operating earnings rose by $11 million or 8%, maintaining an operating margin of 27% of sales. Contractor segment operating margin fell by five percentage points to 24%, impacted by the acquisition of Corab and lower factory volume. Despite these challenges, cash provided by operations increased to $125 million, with significant investments in share repurchases, dividends, and capital expenditures. Looking forward, Graco anticipates low single-digit growth on an organic constant currency basis for the full year, with capital expenditures projected between $50 million to $60 million.

Graco Corporate Events

M&A TransactionsBusiness Operations and Strategy
Graco Completes Strategic Acquisition of Corob S.p.A.
Positive
Nov 8, 2024

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.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.