Back to top

Analyst Blog

Graco Inc. (GGG - Snapshot Report) posted a net income of $38.1 million or 61 cents per share in the second quarter of fiscal 2011 compared with a net income of $24.8 million or 41 cents per share in the year-earlier quarter. The results missed the Zacks Consensus Estimate of 67 cents. 


Net sales came in at $234.7 million, up 22% from the year-earlier quarter, attributable to improved economic conditions, successful new product launches and expansion of business outside North America.

On a segmental basis, Industrial segment sales improved 29% from the year-earlier quarter to $129.3 million. Revenues from Contractor segment sales were $80.7 million, up 9% from the year-earlier quarter. Lubrication segment sales soared 38% from the year-earlier quarter to $24.7 million.

Geographically, sales were up 22% from the year-earlier quarter in the Americas, 32% from the year-earlier quarter in Europe (21% at consistent translation rates), and 34% from the year-earlier quarter in Asia Pacific (27% at consistent translation rates).


Gross margin improved 300 basis points year over year to 56.5%, a result of higher volume, translation, and selling price increases partially offset by higher material costs.

Operating margin moved up to 24.8% in the quarter from 20.4% in the year-earlier quarter, driven by an increase in margins across all segments.

Management stated that the improvement in margins was led by Graco’s investments in innovation, technology, business development and geographic expansion, which underscore the company’s strategic growth policy.

Balance Sheet and Cash Flows

Graco ended the quarter with cash and cash equivalents of $119.3 million, up $16.8 million from the end of the previous quarter. As of July 1, 2011, long-term debt remained static at $150 million from the previous quarter end.

During the quarter, the company generated $29.7 million of cash from operating activities and used $5 million for capital expenditure.


For the second half of 2011, management expects market conditions to be generally favorable for Graco, barring the U.S. housing and commercial construction markets.

Meanwhile, Graco will continue to cooperate with the Federal Trade Commission (FTC) for obtaining the approval for acquiring the finishing businesses of Illinois Tool Works Inc. ((ITW - Analyst Report)).

Headquartered in Minneapolis, Minnesota, Graco supplies technology for management of fluids in both industrial and commercial applications. Its products are used for the application of paints and coatings, for high-pressure cleaning of equipment, and the lubrication and maintenance of vehicles and other equipment.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SIGNET JEWE… SIG 115.42 +6.84%
US SILICA H… SLCA 70.35 +3.46%
RF MICRO DE… RFMD 11.79 +2.57%
TRIQUINT SE… TQNT 19.45 +2.42%
CHYRONHEGO… CHYR 2.63 +2.33%