Graco (GGG) AI Stock Analysis

• Market Cap: $13.56B
• Dividend Yield: 1.36%
• Average Volume (3M): 783.11K
• Price to Earnings (P/E): 27.9
• Beta (1Y): 0.84
• Revenue Growth: 2.85%
• EPS Growth: 3.09%
• Country: US
• Employees: 4,300
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 0.73
• Shares Outstanding: 165,794,110
• 10 Day Avg. Volume: 898,326
• 30 Day Avg. Volume: 783,114
• PEG Ratio: -6.77
• Price to Book (P/B): 5.50
• Price to Sales (P/S): 6.72
• P/FCF Ratio: 27.59
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 8.35
• Enterprise Value/Gross Profit: 15.84
• Enterprise Value/Ebitda: 24.69
• 1Y Price Target: $93.50
• Price Target Upside: 14.35% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

• Rating: 70 Outperform
• Price Target: $90.00 ▲(10.06% Upside)

Graco's overall stock score reflects strong financial performance and effective cash flow management. However, technical analysis indicates bearish momentum, and the valuation suggests potential overvaluation. The earnings call highlighted both growth prospects and challenges, contributing to a balanced outlook.

Positive Factors

Strong Cash Flow Management

Graco's robust cash flow management indicates effective capital allocation and operational efficiency, ensuring financial flexibility for future investments and growth.

Acquisition Growth

Strategic acquisitions are driving sales growth, enhancing Graco's market position and expanding its product offerings, which supports long-term revenue expansion.

Industrial Segment Profitability

High profitability in the Industrial segment underscores Graco's competitive advantage and operational strength, contributing to sustained financial performance.

Negative Factors

Organic Sales Decline

A decline in organic sales suggests challenges in core business growth, potentially impacting long-term revenue stability if not addressed.

Tariff Impact on Costs

Tariff-related cost increases can pressure margins, affecting profitability and competitive pricing, posing a risk to long-term financial health.

Challenges in Contractor Segment

Declines in the Contractor segment highlight potential market challenges and demand issues, which could hinder overall company growth if persistent.

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 company has a low debt-to-equity ratio and impressive return on equity, indicating financial stability and efficient capital utilization. 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.

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 2019
Income Statement
Total Revenue	1.64B	2.11B	2.20B	2.14B	1.99B	1.65B
Gross Profit	866.49M	1.12B	1.16B	1.06B	1.03B	859.76M
EBITDA	555.97M	678.86M	686.59M	641.62M	578.00M	466.69M
Net Income	389.35M	486.08M	506.51M	460.64M	439.87M	343.85M
Balance Sheet
Total Assets	3.23B	3.14B	2.72B	2.44B	2.44B	1.69B
Cash, Cash Equivalents and Short-Term Investments	618.66M	675.34M	537.95M	339.20M	624.30M	220.97M
Total Debt	63.18M	48.65M	50.06M	126.59M	226.11M	203.90M
Total Liabilities	623.95M	555.08M	497.78M	579.25M	733.86M	667.28M
Stockholders Equity	2.61B	2.58B	2.22B	1.86B	1.71B	1.02B
Cash Flow
Free Cash Flow	453.62M	514.96M	466.24M	176.23M	323.33M	290.78M
Operating Cash Flow	487.26M	621.70M	651.02M	377.39M	456.90M	418.73M
Investing Cash Flow	-94.79M	-342.81M	-185.27M	-226.82M	-153.30M	-155.47M
Financing Cash Flow	-461.02M	-139.86M	-268.01M	-434.40M	-57.14M	-174.05M

Graco Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 81.77
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• 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 81.77 is below the 20-day moving average (MA) of 81.93, below the 50-day MA of 83.73, and below the 200-day MA of 83.69, indicating a bearish trend. The MACD of -0.66 indicates Negative momentum. The RSI at 46.42 is Neutral, neither overbought nor oversold. The STOCH value of 29.76 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	―	$14.44B	30.75	17.85%	0.70%	8.01%	2.67%
CR	―	$11.05B	34.90	18.09%	0.47%	-0.37%	21.77%
NDSN	―	$13.03B	29.16	15.59%	1.36%	4.49%	-3.33%
IEX	―	$12.83B	27.11	12.21%	1.66%	7.09%	-2.29%
GGG	―	$13.56B	27.94	19.45%	1.36%	2.85%	3.09%
GNRC	―	$9.86B	31.97	12.38%	―	5.52%	9.03%
Sector *	―	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Graco Corporate Events

Graco Inc. Reports Strong Q3 Earnings Growth

Graco Inc., a company specializing in fluid and coating management systems, operates in the industrial and commercial sectors with a focus on designing and marketing equipment for fluid and coating material management. In its latest earnings report, Graco Inc. announced a 5% increase in net sales for the third quarter, reaching $543.4 million, with operating earnings also rising by 13% to $164.7 million. The company’s net earnings for the quarter saw a significant boost of 13%, amounting to $137.6 million, driven by strategic acquisitions and effective pricing strategies. Graco’s Industrial and Expansion Markets segments showed notable performance, with the Industrial segment achieving a 1% increase in sales and the Expansion Markets segment experiencing a 3% rise in sales, attributed to growth in semiconductor and electric motor applications. Looking ahead, Graco Inc. maintains a positive outlook for 2025, anticipating low single-digit sales growth on an organic constant-currency basis, supported by ongoing pricing actions and steady order rates.

Graco Inc. Reports Mixed Q2 2025 Financial Results

Graco Inc., a leading provider of fluid handling systems and equipment, operates in the industrial and commercial sectors, offering products that move, measure, control, dispense, and spray fluid and coating materials. In its latest earnings report, Graco Inc. reported a 3% increase in net sales for the second quarter of 2025 compared to the same period last year, driven by acquisitions and growth in EMEA and Asia Pacific regions. However, net earnings saw a 4% decline due to increased product costs and lower non-operating income. The Contractor segment experienced a 7% sales increase, while the Industrial and Expansion Markets segments showed stable and improved performance, respectively. Looking ahead, Graco Inc. maintains a positive outlook for 2025, expecting low single-digit sales growth, supported by new product launches and steady order rates.

Graco Inc. Navigates Mixed Earnings Call

Graco Inc.’s recent earnings call painted a mixed picture for the company, reflecting both positive developments and significant challenges. While Graco experienced growth in sales and improved cash flow, the company also faced declines in net earnings and operating margins. The Contractor and DIY segments posed notable hurdles, and the global trade environment, along with tariff impacts, added layers of uncertainty. Despite these challenges, Graco is actively addressing issues through strategic price increases and acquisitions.