Graco (GGG) AI Stock Analysis

• Market Cap: $14.28B
• Dividend Yield: 1.25%
• Average Volume (3M): 729.44K
• Price to Earnings (P/E): 30.0
• Beta (1Y): 0.82
• Revenue Growth: 0.75%
• EPS Growth: -2.74%
• Country: US
• Employees: 4,300
• Sector: Industrials
• Sector Strength: 74
• Industry: Industrial - Machinery
• EPS (TTM): 0.75
• Shares Outstanding: 165,694,200
• 10 Day Avg. Volume: 571,529
• 30 Day Avg. Volume: 729,443
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.98
• Enterprise Value/Revenue: 6.48
• Enterprise Value/Gross Profit: 12.39
• Enterprise Value/Ebitda: 21.03
• 1Y Price Target: $92.00
• Price Target Upside: 7.14% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 78 Outperform
• Price Target: $97.00 ▲(12.96% Upside)

Graco's overall stock score reflects strong financial health and stable technical indicators, which are the most significant factors. However, valuation concerns and mixed earnings call results temper the outlook. The company's strategic initiatives and cash flow improvements are positive, but challenges in organic sales and margin pressures remain.

Positive Factors

R&D Strategy

The proprietary QUANTM all-electric pump remains a key watch item for gauging the success of Graco's R&D cross-pollination strategy, with a higher ROI opening a wider segment of Graco's estimated market.

Sales Strategy

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

Negative Factors

Earnings

Graco's second-quarter revenue, operating margin, and adjusted EPS all came in below consensus, driven primarily by weakness in the North American contractor segment caused by construction market softness.

Tariffs

Margins were impacted by roughly $4 million of tariff costs, representing a roughly $0.02 EPS headwind.

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. (GGG) is a leading manufacturer of fluid handling systems and products, primarily serving the construction, automotive, manufacturing, and maintenance sectors. The company specializes in the design and production of equipment for the application of coatings, sealants, and adhesives, as well as for the management of fluids. Graco's core product offerings include spray equipment, pump systems, and dispensing technologies, which are utilized in various industries to improve efficiency and quality in fluid handling processes.

How the Company Makes Money

Graco 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 Financial Statement Overview

Summary

Graco's financial performance is strong, with consistent revenue growth, high profitability margins, low leverage, and robust cash flow generation. The slight decline in EBIT margin is a minor concern, but overall, the company is financially resilient and efficiently utilizes capital.

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.

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.

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.

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	40.81M	50.06M	117.03M	217.02M	201.41M
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

• Technical Analysis Sentiment: Positive
• Last Price: 85.87
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Positive. The current price of 85.87 is above the 20-day moving average (MA) of 85.44, above the 50-day MA of 85.74, and above the 200-day MA of 84.49, indicating a bullish trend. The MACD of 0.13 indicates Positive momentum. The RSI at 53.19 is Neutral, neither overbought nor oversold. The STOCH value of 28.12 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GGG.

Graco Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ITT	79 Outperform	$13.41B	26.49	20.17%	0.80%	6.69%	21.44%
GGG	78 Outperform	$14.28B	29.96	19.62%	1.25%	0.75%	-2.74%
GNRC	77 Outperform	$10.45B	29.59	14.59%	―	9.69%	54.29%
NDSN	75 Outperform	$12.70B	27.90	15.59%	1.38%	4.49%	-3.33%
CR	72 Outperform	$10.65B	34.92	18.23%	0.48%	3.01%	27.13%
IEX	71 Outperform	$12.41B	26.04	12.25%	1.70%	4.73%	-19.15%
Sector *	64 Neutral	$10.73B	15.74	7.64%	2.01%	2.76%	-15.10%

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.