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Graco (GGG) Shares Gain 29% in 3 Months: What's Driving It?

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Shares of Graco Inc. (GGG - Free Report) have gained notably in the past three months. Solid product offerings, focus on innovation and capacity expansion, adequate liquidity, and rewards to shareholders seem to have boosted sentiments for the stock.

The Minneapolis, MN-based company belongs to the Zacks Manufacturing - General Industrial  industry — which comes under the ambit of the Zacks Industrial Products sector. The company currently has $9.9 billion market capitalization and carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past three months, the company’s shares have gained 28.7% compared with the industry’s growth of 12.6%. Notably, the S&P 500 has risen 7.8% and the sector has grown 13% during the same period.



 

Factors Influencing the Stock

In the past three months, Graco has reported results for second-quarter 2020, with earnings surpassing estimates by 37%. Also, sales in the quarter beat estimates by 12.5%. For 2020, the company kept its financial projections suspended due to the pandemic-related worries.

Notwithstanding the pandemic-stricken environment, the company’s efficient management, a solid customer base and product offerings, and shareholder-friendly policies are expected to continue aiding in the quarters ahead. Additionally, the company’s capacity-expansion efforts — with plans of investing $80 million for the rollout of equipment and machinery in 2020 — are other tailwinds.

Focus on innovation is another trait that has been proving advantageous for Graco over time. In July 2020, the company introduced a line of SaniSpray HP airless sprayers, while unveiled three high-production GrindLazer drum scarifiers, E-Flo iQ adhesive and sealant dispense system, and HydroShield Waterborne system in June.

In addition to the aforementioned factors, reviving manufacturing activities in the United States — raising hopes of a better operating environment for industrial manufacturing companies — might have supported Graco’s price improvement. Notably, the ISM’s Purchasers Manufacturing Index scaled to 56% in August, reflecting four consecutive quarters of growth in manufacturing activities in the country.

Currently, the Zacks Consensus Estimate for the company’s earnings is pegged at $1.57 for 2020 and $1.82 for 2021, marking an increase of 18.9% and 10.3% from the respective 90-day-ago figures. Such an upward revision in earnings estimates is reflective of improving operating conditions for the company.

Graco Inc. Price and Consensus

 

Graco Inc. Price and Consensus

Graco Inc. price-consensus-chart | Graco Inc. Quote

Graco’s Performance Versus Industry Players

The company outperformed three companies in the industry — including IDEX Corporation (IEX - Free Report) , Colfax Corporation and Nordson Corporation (NDSN - Free Report) — in the past three months. During the period, IDEX, Colfax and Nordson’s shares have gained 14.9%, 14.8% and 0.5%, respectively.

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