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Why Is Graco Inc. (GGG) Up 1.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Graco Inc. (GGG - Free Report) . Shares have added about 1.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Graco Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Graco Q4 Earnings & Revenues Beat, Increase Y/Y
Graco fourth-quarter 2022 adjusted earnings of 73 cents per share beat the Zacks Consensus Estimate of 68 cents. The bottom line improved 10.6% year over year.
GGG’s net sales of $555 million also outperformed the Zacks Consensus Estimate of $550 million. The top line increased 3% year over year driven by acquired operations.
On a regional basis, quarterly sales generated from the Americas grew 5%. In Europe, the Middle East and Africa (EMEA) region, sales increased 1% year over year (or up 12% at the constant-currency rate). Sales from the Asia Pacific were flat (or up 10% at the constant-currency rate).
Segmental Details
Revenues for the Industrial segment totaled $190.2 million (contributing to 34.3% of the quarter’s sales), rising 10% year over year, driven by solid growth in all regions. Adverse foreign currency translations lowered sales by 7%. Core sales grew 17% year over year.
Revenues in the Process segment grossed $130.2 million (contributing to 23.5% of the quarter’s sales), increasing 15% year over year. The improvement came on the back of a 16% rise in core sales, driven by growth in all product applications.
Revenues in the Contractor segment totaled $234.6 million (contributing to 42.2% of the quarter’s sales), down 7% year over year due to softening demand in all regions. Core sales decreased 4% in the quarter.
Margin Profile
In the fourth quarter, Graco’s cost of sales grew 6.5% year over year to $282.2 million. Gross profit decreased 1% to $272.8 million, while the margin decreased 1.7 percentage points. An increase in product costs due to supply-chain woes and adverse foreign currency movement hurt the margin performance.
Operating income increased 5% year over year to $152.5 million. Operating margin increased 1 percentage point from the year-ago quarter. Interest expenses in the quarter totaled $1.3 million compared with $2.8 million reported in the year-ago period. The adjusted effective tax rate in the quarter was 19%.
Balance Sheet and Cash Flow
Exiting the fourth quarter, Graco had cash and cash equivalents of $339.2 million compared with $624.3 million at the end of 2021. The long-term debt was $75 million, flat compared with the December 2021 level.
Graco generated net cash of $377.4 million from operating activities in 2022 compared with $456.9 million generated in the year-ago period. Capital used for purchasing property, plant and equipment totaled $201.2 million compared with $133.6 million in the year-ago period.
GGG paid out dividends worth $142.1 million to its shareholders in 2022, up 11.8% from the previous year. Graco repurchased common stocks worth $233.4 million in 2022.
Outlook
Amid microeconomic uncertainties, Graco expects to launch new products, explore new markets, expand its global channel and make strategic acquisitions. The company expects low single-digit organic revenue growth on a constant-currency basis for 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Graco Inc. has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Graco Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Graco Inc. (GGG) Up 1.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Graco Inc. (GGG - Free Report) . Shares have added about 1.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Graco Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Graco Q4 Earnings & Revenues Beat, Increase Y/Y
Graco fourth-quarter 2022 adjusted earnings of 73 cents per share beat the Zacks Consensus Estimate of 68 cents. The bottom line improved 10.6% year over year.
GGG’s net sales of $555 million also outperformed the Zacks Consensus Estimate of $550 million. The top line increased 3% year over year driven by acquired operations.
On a regional basis, quarterly sales generated from the Americas grew 5%. In Europe, the Middle East and Africa (EMEA) region, sales increased 1% year over year (or up 12% at the constant-currency rate). Sales from the Asia Pacific were flat (or up 10% at the constant-currency rate).
Segmental Details
Revenues for the Industrial segment totaled $190.2 million (contributing to 34.3% of the quarter’s sales), rising 10% year over year, driven by solid growth in all regions. Adverse foreign currency translations lowered sales by 7%. Core sales grew 17% year over year.
Revenues in the Process segment grossed $130.2 million (contributing to 23.5% of the quarter’s sales), increasing 15% year over year. The improvement came on the back of a 16% rise in core sales, driven by growth in all product applications.
Revenues in the Contractor segment totaled $234.6 million (contributing to 42.2% of the quarter’s sales), down 7% year over year due to softening demand in all regions. Core sales decreased 4% in the quarter.
Margin Profile
In the fourth quarter, Graco’s cost of sales grew 6.5% year over year to $282.2 million. Gross profit decreased 1% to $272.8 million, while the margin decreased 1.7 percentage points. An increase in product costs due to supply-chain woes and adverse foreign currency movement hurt the margin performance.
Operating income increased 5% year over year to $152.5 million. Operating margin increased 1 percentage point from the year-ago quarter. Interest expenses in the quarter totaled $1.3 million compared with $2.8 million reported in the year-ago period. The adjusted effective tax rate in the quarter was 19%.
Balance Sheet and Cash Flow
Exiting the fourth quarter, Graco had cash and cash equivalents of $339.2 million compared with $624.3 million at the end of 2021. The long-term debt was $75 million, flat compared with the December 2021 level.
Graco generated net cash of $377.4 million from operating activities in 2022 compared with $456.9 million generated in the year-ago period. Capital used for purchasing property, plant and equipment totaled $201.2 million compared with $133.6 million in the year-ago period.
GGG paid out dividends worth $142.1 million to its shareholders in 2022, up 11.8% from the previous year. Graco repurchased common stocks worth $233.4 million in 2022.
Outlook
Amid microeconomic uncertainties, Graco expects to launch new products, explore new markets, expand its global channel and make strategic acquisitions. The company expects low single-digit organic revenue growth on a constant-currency basis for 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Graco Inc. has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Graco Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.