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1. Company Snapshot

1.a. Company Description

Graco 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.

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1.b. Last Insights on GGG

Graco Inc.'s recent performance was driven by strong Q1 2025 earnings and revenue growth, with sales increasing 7% year-over-year due to higher demand in all segments. The company's operating earnings also rose 8% year-over-year, driven by new product launches and accretive acquisitions. Additionally, Graco's shareholder-friendly policies, such as its commitment to returning capital to shareholders, have contributed to its positive performance.

1.c. Company Highlights

2. Graco Inc. Posts Solid Q4 Earnings, Driven by Acquisitions and Organic Growth

Graco Inc. reported fourth-quarter sales of $593 million, an 8% increase from the same quarter last year, with acquisitions contributing 4%, currency translation 2%, and organic sales 2% to growth. Net earnings rose 22% to $133 million, or $0.79 per diluted share, in line with analysts' estimates of $0.77. The company's revenue growth was driven by strong performance in both the Industrial and Contractor segments.

Publication Date: Feb -15

📋 Highlights
  • Q4 Sales Growth:: Fourth quarter sales increased 8% to $593M, driven by 4% from acquisitions, 2% currency translation, and 2% organic growth.
  • Contractor Segment Performance:: Contractor sales rose 8% (8% total), with organic growth at 1% (COROB up 25%) and acquisitions contributing 5%.
  • Industrial Segment Strength:: Industrial sales grew 11%, led by 5% organic growth from Powder Finishing systems and Color Service acquisitions.
  • 2026 Guidance:: Low single-digit organic growth (constant currency) and mid-single-digit growth with acquisitions; tax rate projected at 20–21%.
  • Acquisition Impact:: 2026 acquisitive revenue expected at $190M (vs. $113M in 2025), with typical margins post-integration.

Segment Performance

The Contractor segment saw an 8% sales increase, with acquisitions contributing 5%, currency translation 2%, and organic sales 1%. The Industrial segment delivered an 11% sales growth, driven by solid organic performance and contributions from the Color Service acquisitions. Organic growth of 5% was primarily due to project completions in Powder Finishing systems and good growth in the Americas and EMEA.

Outlook and Guidance

Graco provided 2026 revenue guidance of low single-digit organic growth on a constant currency basis and mid-single-digit growth after factoring in expected incremental sales from the Color Service and Radia acquisitions. The effective tax rate is expected to be 20% to 21%, excluding any impact from excess tax benefits related to stock option exercises and other one-time items. Analysts estimate next year's revenue growth at 4.6%.

Valuation and Metrics

Graco's current valuation metrics include a P/E Ratio of 30.01, P/B Ratio of 5.9, and P/S Ratio of 7.02. The company's Return on Equity (ROE) stands at 20.38%, and Return on Invested Capital (ROIC) is 17.55%. With a Dividend Yield of 1.18%, Graco offers a relatively stable income stream. The EV/EBITDA ratio of 20.14 suggests that the company's enterprise value is reasonable relative to its earnings before interest, taxes, depreciation, and amortization.

Key Drivers and Risks

Key positives for 2026 include lower mortgage rates potentially boosting the residential market and factory CapEx projects. Potential negatives include tariffs, which could impact the company's profitability. Graco is well-prepared to adjust pricing and operations as needed, with a strong track record of navigating uncertain markets.

3. NewsRoom

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Graco's Valuation Leaves Little Room For Error

Apr -13

Source: seekingalpha.com

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All You Need to Know About Graco (GGG) Rating Upgrade to Buy

Apr -06

Source: zacks.com

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Graco Stock Exhibits Strong Prospects Despite Persisting Headwinds

Apr -02

Source: zacks.com

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Graco Inc. Announces First Quarter 2026 Earnings Conference Call

Apr -02

Source: businesswire.com

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SG Americas Securities LLC Boosts Holdings in Graco Inc. $GGG

Mar -30

Source: defenseworld.net

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Canoe Financial LP Decreases Stake in Graco Inc. $GGG

Mar -29

Source: defenseworld.net

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Confluence Investment Management LLC Has $51.07 Million Stake in Graco Inc. $GGG

Mar -20

Source: defenseworld.net

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Graco Inc. (NYSE:GGG) Given Average Rating of “Moderate Buy” by Brokerages

Mar -19

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.76%)

6. Segments

Contractor

Expected Growth: 4.5%

Graco Inc.'s contractor segment growth of 4.5% is driven by increasing demand for painting and coating equipment, expansion into emerging markets, and strategic acquisitions. Additionally, the company's focus on innovation, such as the introduction of new products and technologies, has contributed to its growth. Furthermore, Graco's strong brand reputation and customer relationships have enabled the company to maintain its market share and capitalize on industry trends.

Industrial

Expected Growth: 4.8%

Graco Inc.'s Industrial segment growth of 4.8% is driven by increasing demand for industrial coatings and adhesives, expansion in emerging markets, and strategic acquisitions. Additionally, the company's focus on innovation, operational efficiency, and customer relationships has contributed to its growth momentum.

Process

Expected Growth: 5.2%

Graco Inc.'s 5.2% growth is driven by increasing demand for industrial coatings and adhesives, expansion in emerging markets, and strategic acquisitions. Additionally, the company's focus on innovation, operational efficiency, and cost savings initiatives have contributed to its growth momentum.

7. Detailed Products

Industrial Products

Graco's Industrial Products segment provides fluid handling equipment and systems for various industries, including manufacturing, processing, and construction.

Process Pumps

Graco's Process Pumps are designed for transferring and metering fluids in various industrial processes, including chemical processing, oil and gas, and water treatment.

Lubrication Systems

Graco's Lubrication Systems provide automated lubrication solutions for industrial equipment, vehicles, and machinery.

Dispense Equipment

Graco's Dispense Equipment is used for applying adhesives, sealants, and other materials in various industries, including automotive, aerospace, and construction.

Paint and Coatings Equipment

Graco's Paint and Coatings Equipment is designed for applying paints, coatings, and other finishes in various industries, including automotive, aerospace, and construction.

Oil and Natural Gas Equipment

Graco's Oil and Natural Gas Equipment is used for drilling, extraction, and production of oil and natural gas.

Contractor Equipment

Graco's Contractor Equipment is designed for professional contractors, including sprayers, pumps, and accessories for painting, coating, and texture applications.

8. Graco Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Graco Inc. faces moderate threat from substitutes due to the presence of alternative products in the market, such as manual painting tools and DIY painting kits.

Bargaining Power Of Customers

Graco Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are specialized, making it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

Graco Inc. relies on a few large suppliers for raw materials, which gives them some bargaining power. However, the company's large scale of operations and diversified supply chain mitigate this risk.

Threat Of New Entrants

The capital-intensive nature of the painting equipment industry and the need for specialized technology and manufacturing expertise create barriers to entry, reducing the threat of new entrants.

Intensity Of Rivalry

The painting equipment industry is highly competitive, with several established players competing for market share. Graco Inc. faces intense rivalry from companies such as Titan Tool and 3M.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 2.20%
Debt Cost 8.15%
Equity Weight 97.80%
Equity Cost 8.15%
WACC 8.15%
Leverage 2.25%

11. Quality Control: Graco Inc. passed 9 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Graco

A-Score: 5.4/10

Value: 2.1

Growth: 5.2

Quality: 8.5

Yield: 2.0

Momentum: 4.5

Volatility: 10.0

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A-Score: 5.3/10

Value: 3.3

Growth: 6.8

Quality: 6.6

Yield: 2.0

Momentum: 4.0

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Flowserve

A-Score: 5.1/10

Value: 4.4

Growth: 4.6

Quality: 6.7

Yield: 3.0

Momentum: 7.5

Volatility: 4.7

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Nordson

A-Score: 5.1/10

Value: 2.5

Growth: 5.8

Quality: 7.1

Yield: 2.0

Momentum: 4.0

Volatility: 9.0

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IDEX

A-Score: 4.7/10

Value: 2.9

Growth: 4.9

Quality: 7.0

Yield: 3.0

Momentum: 2.0

Volatility: 8.3

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A-Score: 4.0/10

Value: 2.7

Growth: 6.4

Quality: 7.0

Yield: 0.0

Momentum: 1.5

Volatility: 6.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

87.48$

Current Price

87.48$

Potential

-0.00%

Expected Cash-Flows