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Graco (GGG)
NYSE:GGG
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Graco
(NYSE:GGG)
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Rating:67Neutral
Price Target:
$91.00
▲(7.43% Upside)
Graco's overall stock score reflects strong financial health and strategic initiatives, tempered by technical weakness and valuation concerns. The company's robust balance sheet and cash flow generation are significant strengths, but challenges in organic sales and tariff impacts present risks. The high P/E ratio suggests potential overvaluation, while technical indicators point to bearish momentum.
Positive Factors
Strong Cash Flow Generation
Graco's ability to generate strong cash flow from operations enhances its financial flexibility, supporting investments in growth initiatives and shareholder returns.
Robust Balance Sheet
A robust balance sheet with low leverage and high equity ratio provides Graco with stability and capacity to withstand economic fluctuations or invest in strategic opportunities.
Strategic Acquisition
The acquisition of Color Service enhances Graco's product offerings and technological capabilities, potentially driving future growth and competitive advantage in precision dosing systems.
Negative Factors
Decline in Organic Sales
A decline in organic sales indicates challenges in maintaining growth without acquisitions, which could impact long-term revenue sustainability if not addressed.
Decreased Gross Margin
A decrease in gross margin suggests rising operational costs, which could pressure profitability if cost management strategies are not effectively implemented.
Tariff Impact
Ongoing tariff impacts increase costs and reduce margins, posing a risk to profitability and necessitating strategic pricing or supply chain adjustments to mitigate effects.
Graco (GGG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$14.04B
Dividend Yield1.29%
Average Volume (3M)677.36K
Price to Earnings (P/E)29.8
Beta (1Y)0.79
Revenue Growth0.75%
EPS Growth-2.74%
CountryUS
Employees4,300
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)0.75
Shares Outstanding165,694,200
10 Day Avg. Volume822,946
30 Day Avg. Volume677,360
Financial Highlights & Ratios
PEG Ratio-6.77
Price to Book (P/B)5.50
Price to Sales (P/S)6.72
P/FCF Ratio27.59
Enterprise Value/Market Cap1.00
Enterprise Value/Revenue6.48
Enterprise Value/Gross Profit12.39
Enterprise Value/Ebitda21.03
Forecast
1Y Price Target
$91.67Price Target Upside8.22% Upside
Rating ConsensusHold
Number of Analyst Covering5
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 generates revenue through the sale of its diverse range of fluid handling equipment and systems. Key revenue streams include the sale of industrial and contractor equipment, aftermarket parts and services, and rental programs for specific equipment. The company also benefits from a strong presence in international markets, which contributes to its sales growth. Significant partnerships with distributors and suppliers enhance Graco's market reach and enable it to cater to a wide customer base. Additionally, Graco invests in research and development to innovate and expand its product offerings, which helps drive sales and maintain its competitive advantage in the fluid handling industry.
Graco Key Performance Indicators (KPIs)
Graco Earnings Call Summary
Earnings Call Date:Jul 23, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While Graco saw positive developments in cash flow and certain segments like Powder Finishing, it faced challenges with declining organic sales, decreased gross margins, and tariff impacts. The acquisition of Color Service is a strategic move, but it comes amid ongoing market uncertainties.Q2-2025 Updates
Positive Updates
Increase in Cash Flow from Operations
Cash provided by operations totaled $308 million for the year, an increase of $50 million or 19%. Cash flow from operations less capital expenditures increased by $93 million or 51% for the year-to-date.
Successful Inventory Management
Improved inventory management from consolidating operations under One Graco initiative contributed to increased cash flow and efficiency.
Industrial Segment Performance
Powder Finishing system sales were strong, with increased quoting activity and improved performance in the Americas and Asia Pacific regions.
Color Service Acquisition
Announcement of the acquisition of Color Service, a global manufacturer of specialized automatic precision dosing systems, with expected synergies in gravimetric dosing technology.
Negative Updates
Decline in Organic Sales
Overall, organic sales were down 3% in the second quarter, with the Contractor segment particularly weak, declining 5%.
Decreased Gross Margin
The gross margin rate decreased by 200 basis points in the quarter, impacted by acquisitions and increased tariffs.
Challenges in Contractor Segment
Contractor segment operating margin rate for the quarter was 26%, down from 31% in the same quarter last year, due to higher tariffs and lower factory volume.
Tariff Impact
Incremental costs related to tariffs were about $4 million in the quarter, affecting EPS by $0.02. Tariff pressures continue to impact the business.
Company Guidance
During the second quarter conference call for Graco Inc., the company reported sales of $572 million, representing a 3% increase from the previous year, although this included a 6% growth contribution from acquisitions, with organic sales declining by 3%. Net earnings decreased by 4% to $128 million, or $0.76 per diluted share, while adjusted non-GAAP net earnings were $127 million, reflecting a 3% decrease. The quarter saw a 200 basis point decrease in gross margin rate, influenced by acquisitions and higher tariffs, which added $4 million in costs. Operating expenses increased by 2%, driven by acquisitions, but excluding these, expenses declined by 5% due to the One Graco initiative and other factors. Operating earnings dropped by 2%, with the contractor segment's margin shrinking by 5 percentage points year-over-year. Cash flow from operations increased by 19% to $308 million, and cash flow from operations less capital expenditures rose by 51%. The company repurchased 4.4 million shares for $361 million and declared $92 million in dividends. Looking ahead, Graco maintained its revenue guidance for the year, expecting low single-digit organic sales growth, with targeted price increases planned to offset tariff impacts starting in September.Graco Financial Statement Overview
Summary
Graco exhibits strong financial health with consistent revenue growth, high profitability margins, low leverage, and robust cash flow generation. The company's balance sheet is particularly strong, with a low debt-to-equity ratio and high equity ratio, indicating financial stability. Despite a slight decline in EBIT margin, the overall financial trajectory remains positive.Income Statement
Graco has demonstrated consistent revenue growth over the past years, with a notable increase in gross profit margin. The TTM gross profit margin stands at 52.24% and net profit margin at 22.26%, indicating strong operational efficiency and profitability. However, there is a slight decline in EBIT margin from 2023 to TTM, suggesting rising operational costs.87
Very Positive
Balance Sheet
The company's balance sheet is robust, with a low debt-to-equity ratio of 0.02, showcasing financial stability and low leverage risk. The equity ratio is strong at 82.09%, reflecting a high proportion of assets financed by equity. Return on equity at 19.29% is impressive, indicating efficient use of shareholder funds.92
Very Positive
Cash Flow
Graco's cash flow is solid, with an operating cash flow to net income ratio of 1.39, indicating strong cash generation from operations. The free cash flow growth is robust, and the free cash flow to net income ratio is 1.26, which highlights effective capital management. A significant increase in free cash flow from 2024 to TTM underlines improved cash efficiency.85
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.17B | 2.11B | 2.20B | 2.14B | 1.99B | 1.65B |
| Gross Profit | 1.13B | 1.12B | 1.16B | 1.06B | 1.03B | 854.94M |
| EBITDA | 667.59M | 678.86M | 686.59M | 641.62M | 578.00M | 440.43M |
| Net Income | 482.63M | 486.08M | 506.51M | 460.64M | 439.87M | 330.46M |
Balance Sheet | ||||||
| Total Assets | 3.05B | 3.14B | 2.72B | 2.44B | 2.44B | 1.99B |
| Cash, Cash Equivalents and Short-Term Investments | 534.92M | 675.34M | 537.95M | 339.20M | 624.30M | 378.91M |
| Total Debt | 51.37M | 48.65M | 50.06M | 126.59M | 226.11M | 212.59M |
| Total Liabilities | 545.10M | 555.08M | 497.78M | 579.25M | 733.86M | 704.22M |
| Stockholders Equity | 2.50B | 2.58B | 2.22B | 1.86B | 1.71B | 1.28B |
Cash Flow | ||||||
| Free Cash Flow | 608.41M | 514.96M | 466.24M | 176.23M | 323.33M | 322.70M |
| Operating Cash Flow | 671.88M | 621.70M | 651.02M | 377.39M | 456.90M | 394.04M |
| Investing Cash Flow | -305.62M | -342.81M | -185.27M | -226.82M | -153.30M | -99.04M |
| Financing Cash Flow | -507.61M | -139.86M | -268.01M | -434.40M | -57.14M | -139.47M |
Graco Technical Analysis
Neutral
84.71
Price Trends
85.06
Negative
85.16
Negative
84.15
Positive
Market Momentum
-0.26
Positive
48.30
Neutral
23.39
Neutral
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 84.71 is below the 20-day moving average (MA) of 84.94, below the 50-day MA of 85.06, and above the 200-day MA of 84.15, indicating a neutral trend. The MACD of -0.26 indicates Positive momentum. The RSI at 48.30 is Neutral, neither overbought nor oversold. The STOCH value of 23.39 is Neutral, 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 (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | 13.79B | 27.54 | 20.24% | 0.78% | 6.69% | 21.44% | |
75 Outperform | 12.75B | 27.85 | 15.26% | 1.39% | 4.49% | -3.33% | |
71 Outperform | 12.15B | 25.71 | 11.70% | 1.74% | 4.73% | -19.15% | |
71 Outperform | 10.48B | 33.72 | 18.63% | 0.49% | 3.01% | 27.13% | |
69 Neutral | 9.87B | 27.95 | 14.02% | ― | 9.69% | 54.29% | |
67 Neutral | $14.04B | 29.80 | 19.62% | 1.29% | 0.75% | -2.74% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
Performance Comparison
GGG
Graco
84.71
-1.68
-1.94%
GNRC
Generac Holdings
168.27
9.39
5.91%
IEX
IDEX
161.35
-50.15
-23.71%
ITT
ITT
176.82
28.65
19.34%
NDSN
Nordson
227.00
-31.77
-12.28%
CR
Crane Company
182.03
24.55
15.59%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.