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Graco Inc. (GGG - Free Report) reported mixed results for second-quarter 2018.
Earnings/Revenues
Graco’s quarterly adjusted earnings came in at 48 cents per share, up 26% year over year. The upswing was driven by strong operational performance, robust sales volumes and solid factory activity. However, the bottom line fell short of the Zacks Consensus Estimate of 50 cents per share.
Quarterly revenues came in at $424.6 million, up 12% year over year. The top line also surpassed the Zacks Consensus Estimate of $422 million. The upside primarily stemmed from acquisition benefits and favorable foreign currency-translation impact.
Segmental Break-Up
Revenues in the Industrial segment during the reported quarter came in at $190.5 million, up 8.9% year over year. This rise stemmed from robust finishing system sales and strong project activity.
The Process segment recorded revenues of $85.1 million, which improved 15.9% year over year. The segment’s improved top-line performance came on the back of robust lubrication, as well as oil and natural gas business.
The Contractor segment’s revenues grew 13.6% year over year to $149 million, driven by solid sales secured from all business channels.
Cost of products sold in the second quarter was $194.7 million, up 11.3% year over year.
Gross profit margin was 54.1%, up 20 basis points (bps) year over year.
Selling, marketing and distribution expenses during the quarter were $62.9 million, up 13.3% year over year. Operating margin in the reported quarter was 26.7%, up 20 bps year over year.
Balance Sheet/Cash Flow
Exiting the second quarter, Graco had cash and cash equivalents of $109.9 million, up from $103.7 million recorded as of Dec 29, 2017. Long-term debt stood at $297.3 million, higher than $226 million recorded at the end of 2017.
In first-half 2018, Graco generated $170.8-million cash from operating activities, higher than $135.7 million recorded in the comparable period last year. Capital expenditure totaled $27.4 million, higher than $16.6 million witnessed at the end of the first six months of 2017.
Outlook
Graco anticipates securing mid-to-high single-digit organic revenue growth in 2018. This Zacks Rank #2 (Buy) stock believes solid end-market demand will boost its near-term revenues and profitability. Nevertheless, the ongoing tariff-related concerns and material cost inflation remain causes of concern.
Apogee Enterprises, Inc. (APOG - Free Report) carries a Zacks Rank #2. The company delivered an average positive earnings surprise of 0.88% over the past four quarters.
DXP Enterprises, Inc. (DXPE - Free Report) is another Zacks #2 Ranked company. The company came up with an average positive earnings surprise of 70.97% over the preceding four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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Graco's (GGG) Q2 Earnings Miss, Revenues Beat Estimates
Graco Inc. (GGG - Free Report) reported mixed results for second-quarter 2018.
Earnings/Revenues
Graco’s quarterly adjusted earnings came in at 48 cents per share, up 26% year over year. The upswing was driven by strong operational performance, robust sales volumes and solid factory activity. However, the bottom line fell short of the Zacks Consensus Estimate of 50 cents per share.
Quarterly revenues came in at $424.6 million, up 12% year over year. The top line also surpassed the Zacks Consensus Estimate of $422 million. The upside primarily stemmed from acquisition benefits and favorable foreign currency-translation impact.
Segmental Break-Up
Revenues in the Industrial segment during the reported quarter came in at $190.5 million, up 8.9% year over year. This rise stemmed from robust finishing system sales and strong project activity.
The Process segment recorded revenues of $85.1 million, which improved 15.9% year over year. The segment’s improved top-line performance came on the back of robust lubrication, as well as oil and natural gas business.
The Contractor segment’s revenues grew 13.6% year over year to $149 million, driven by solid sales secured from all business channels.
Graco Inc. Price, Consensus and EPS Surprise
Graco Inc. Price, Consensus and EPS Surprise | Graco Inc. Quote
Costs/Margins
Cost of products sold in the second quarter was $194.7 million, up 11.3% year over year.
Gross profit margin was 54.1%, up 20 basis points (bps) year over year.
Selling, marketing and distribution expenses during the quarter were $62.9 million, up 13.3% year over year. Operating margin in the reported quarter was 26.7%, up 20 bps year over year.
Balance Sheet/Cash Flow
Exiting the second quarter, Graco had cash and cash equivalents of $109.9 million, up from $103.7 million recorded as of Dec 29, 2017. Long-term debt stood at $297.3 million, higher than $226 million recorded at the end of 2017.
In first-half 2018, Graco generated $170.8-million cash from operating activities, higher than $135.7 million recorded in the comparable period last year. Capital expenditure totaled $27.4 million, higher than $16.6 million witnessed at the end of the first six months of 2017.
Outlook
Graco anticipates securing mid-to-high single-digit organic revenue growth in 2018. This Zacks Rank #2 (Buy) stock believes solid end-market demand will boost its near-term revenues and profitability. Nevertheless, the ongoing tariff-related concerns and material cost inflation remain causes of concern.
Other Stocks to Consider
Other top-ranked stocks in the Zacks Industrial Products sector are listed below:
DMC Global Inc. (BOOM - Free Report) sports a Zacks Rank #1 (Strong Buy). The company delivered an average positive earnings surprise of 69.02% over the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Apogee Enterprises, Inc. (APOG - Free Report) carries a Zacks Rank #2. The company delivered an average positive earnings surprise of 0.88% over the past four quarters.
DXP Enterprises, Inc. (DXPE - Free Report) is another Zacks #2 Ranked company. The company came up with an average positive earnings surprise of 70.97% over the preceding four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>