Graco Inc. (GGG, Financial) has reported a notable increase in its first-quarter revenue, reaching $528.3 million, surpassing analysts' expectations of $523 million. This represents a 7% rise in sales compared to the previous year, with all segments and regions showing robust performance.
The company experienced significant organic growth, particularly within its Industrial and Expansion Markets segments, benefiting from heightened activity in industrial and semiconductor markets. The Contractor segment also showed promising results, with Corob contributing a 6% growth, aligning with the company's projections.
Graco's President and CEO, Mark Sheahan, highlighted the company's success across its diverse operations, signaling a strong start to the fiscal year. The positive results underscore the effectiveness of Graco's strategic initiatives in capturing market opportunities and expanding its global footprint.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 8 analysts, the average target price for Graco Inc (GGG, Financial) is $90.16 with a high estimate of $105.00 and a low estimate of $80.30. The average target implies an upside of 14.17% from the current price of $78.97. More detailed estimate data can be found on the Graco Inc (GGG) Forecast page.
Based on the consensus recommendation from 12 brokerage firms, Graco Inc's (GGG, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Graco Inc (GGG, Financial) in one year is $82.51, suggesting a upside of 4.48% from the current price of $78.97. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Graco Inc (GGG) Summary page.
Key Business Developments
Release Date: January 28, 2025
- Fourth Quarter Sales: $549 million, a decrease of 3% from the same quarter last year.
- Acquisitions Contribution: 3% sales growth in the quarter.
- Net Earnings: $109 million, a decrease of 1% for the quarter.
- Adjusted Non-GAAP Net Earnings: $110 million, a decrease of 20%.
- Gross Margin Rate: Decreased by 200 basis points in the quarter.
- Operating Expenses: Increased by $19 million or 15% in the quarter.
- Operating Margin Rate: 24% compared to 30% for the same quarter last year.
- Industrial Segment Operating Margin Rate: 33% compared to 37% for the same quarter last year.
- Process Segment Operating Margin Rate: 29% compared to 28% for the same quarter last year.
- Contractor Segment Operating Margin Rate: 27% compared to 29% for the same quarter last year.
- Cash Provided by Operations: $622 million for the year, a decrease of $29 million from last year.
- Share Repurchases: 399,000 shares for $31 million.
- Acquisitions: $242 million.
- Dividends: $172 million.
- Capital Expenditures: $107 million, with $67 million related to facility expansion projects.
- Adjusted Effective Tax Rate: 21.5% for the quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Graco Inc (GGG, Financial) reported a successful acquisition of Corob, which contributed 3% revenue growth in the fourth quarter.
- The company has completed expansion projects for nearly all operations, which positions them well for future demand.
- Graco Inc (GGG) has a strong cash flow, providing flexibility for future investments and operations.
- The new global customer-centric operating structure is expected to generate annual savings of approximately $16 million.
- Protective coatings activities showed strong growth across all regions, supported by infrastructure investments and increases in the container market.
Negative Points
- Fourth quarter sales decreased by 3% compared to the same quarter last year, with a 6% decline excluding acquisitions.
- Reported net earnings decreased by 1% to $109 million, with adjusted non-GAAP net earnings down 20%.
- Gross margin rate decreased by 200 basis points due to lower sales volume and unfavorable product and channel mix.
- Total operating expenses increased by 15% due to business reorganization costs, expenses from acquired operations, and litigation costs.
- The industrial segment experienced a 13% revenue decline for the quarter, impacted by weakness in key markets such as China and the semiconductor business.
