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Graco Inc. (GGG) Up 8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Graco Inc. (GGG - Free Report) . Shares have added about 8% in that time frame, underperforming 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 catalysts.
Graco Q3 Earnings Beat Estimates, Revenues Miss
Graco’s third-quarter 2023 adjusted earnings of 76 cents per share beat the Zacks Consensus Estimate of adjusted earnings of 73 cents per share. The bottom line improved 16.7% year over year due to solid momentum in the Industrial and Process segments. Shares of the company have increased 2.7% since the earnings release on Oct 25.
However, GGG’s net sales of $539.7 million underperformed the consensus estimate of $559 million. The top line decreased 1.1% year over year.
On a regional basis, quarterly sales generated from the Americas were flat year over year. In Europe, the Middle East and Africa region, sales decreased 4% year over year. Sales from the Asia Pacific decreased 1% year over year.
Segmental Details
Revenues in the Industrial segment totaled $157.1 million (contributing to 29.1% of the quarter’s sales), rising 1% year over year, driven by improved project activity in the Asia Pacific region. Our estimate for segmental revenues was $161.5 million. Favorable foreign currency translations increased sales by 2%. Core sales declined 2% year over year.
Revenues in the Process segment grossed $137.3 million (contributing to 25.4% of the quarter’s sales), increasing 9.5% year over year. Our estimate for segmental revenues was $135.9 million. The improvement came on the back of a 9% rise in core sales. Favorable foreign currency translations increased sales by 1%.
Revenues in the Contractor segment totaled $245.3 million (contributing to 45.5% of the quarter’s sales), down 7% year over year due to slower economic activity in construction markets. Our estimate for segmental revenues was $260.9 million. Core sales declined 8% in the quarter. Favorable foreign currency translations increased sales by 1%.
Margin Profile
In the third quarter, Graco’s cost of sales declined 10.3% year over year to $255.1 million. Gross profit increased 9% to $284.5 million while the margin increased 4.9 percentage points. The favorable effects of realized pricing and lower product cost benefited the margin’s performance.
Operating income increased 14% year over year to $163.2 million. The operating margin increased by 4 percentage points from the year-ago quarter. Interest expenses in the first nine months totaled $4.5 million compared with $8.6 million reported in the year-ago period. The adjusted effective tax rate in the quarter was 19%.
Balance Sheet and Cash Flow
Exiting the third quarter, Graco had cash and cash equivalents of $525.8 million compared with $339.2 million at the end of 2022.
Graco generated net cash of $491.4 million from operating activities in the first nine months of 2023 compared with $271.6 million generated in the year-ago period. Capital used for purchasing property, plant and equipment totaled $145.6 million compared with $147.2 million in the year-ago period.
GGG paid out dividends worth $118.7 million to its shareholders in the first nine months of 2023, up 11.1% from the previous year. Graco repurchased common stocks worth $27.1 million in the first nine months of 2023.
Outlook
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, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Graco Inc. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Graco Inc. has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Graco Inc. is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Dover Corporation (DOV - Free Report) , a stock from the same industry, has gained 6.1%. The company reported its results for the quarter ended September 2023 more than a month ago.
Dover Corporation reported revenues of $2.15 billion in the last reported quarter, representing a year-over-year change of -0.2%. EPS of $2.35 for the same period compares with $2.26 a year ago.
Dover Corporation is expected to post earnings of $2.46 per share for the current quarter, representing a year-over-year change of +13.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -2%.
Dover Corporation has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Graco Inc. (GGG) Up 8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Graco Inc. (GGG - Free Report) . Shares have added about 8% in that time frame, underperforming 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 catalysts.
Graco Q3 Earnings Beat Estimates, Revenues Miss
Graco’s third-quarter 2023 adjusted earnings of 76 cents per share beat the Zacks Consensus Estimate of adjusted earnings of 73 cents per share. The bottom line improved 16.7% year over year due to solid momentum in the Industrial and Process segments. Shares of the company have increased 2.7% since the earnings release on Oct 25.
However, GGG’s net sales of $539.7 million underperformed the consensus estimate of $559 million. The top line decreased 1.1% year over year.
On a regional basis, quarterly sales generated from the Americas were flat year over year. In Europe, the Middle East and Africa region, sales decreased 4% year over year. Sales from the Asia Pacific decreased 1% year over year.
Segmental Details
Revenues in the Industrial segment totaled $157.1 million (contributing to 29.1% of the quarter’s sales), rising 1% year over year, driven by improved project activity in the Asia Pacific region. Our estimate for segmental revenues was $161.5 million. Favorable foreign currency translations increased sales by 2%. Core sales declined 2% year over year.
Revenues in the Process segment grossed $137.3 million (contributing to 25.4% of the quarter’s sales), increasing 9.5% year over year. Our estimate for segmental revenues was $135.9 million. The improvement came on the back of a 9% rise in core sales. Favorable foreign currency translations increased sales by 1%.
Revenues in the Contractor segment totaled $245.3 million (contributing to 45.5% of the quarter’s sales), down 7% year over year due to slower economic activity in construction markets. Our estimate for segmental revenues was $260.9 million. Core sales declined 8% in the quarter. Favorable foreign currency translations increased sales by 1%.
Margin Profile
In the third quarter, Graco’s cost of sales declined 10.3% year over year to $255.1 million. Gross profit increased 9% to $284.5 million while the margin increased 4.9 percentage points. The favorable effects of realized pricing and lower product cost benefited the margin’s performance.
Operating income increased 14% year over year to $163.2 million. The operating margin increased by 4 percentage points from the year-ago quarter. Interest expenses in the first nine months totaled $4.5 million compared with $8.6 million reported in the year-ago period. The adjusted effective tax rate in the quarter was 19%.
Balance Sheet and Cash Flow
Exiting the third quarter, Graco had cash and cash equivalents of $525.8 million compared with $339.2 million at the end of 2022.
Graco generated net cash of $491.4 million from operating activities in the first nine months of 2023 compared with $271.6 million generated in the year-ago period. Capital used for purchasing property, plant and equipment totaled $145.6 million compared with $147.2 million in the year-ago period.
GGG paid out dividends worth $118.7 million to its shareholders in the first nine months of 2023, up 11.1% from the previous year. Graco repurchased common stocks worth $27.1 million in the first nine months of 2023.
Outlook
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, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Graco Inc. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Graco Inc. has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Graco Inc. is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Dover Corporation (DOV - Free Report) , a stock from the same industry, has gained 6.1%. The company reported its results for the quarter ended September 2023 more than a month ago.
Dover Corporation reported revenues of $2.15 billion in the last reported quarter, representing a year-over-year change of -0.2%. EPS of $2.35 for the same period compares with $2.26 a year ago.
Dover Corporation is expected to post earnings of $2.46 per share for the current quarter, representing a year-over-year change of +13.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -2%.
Dover Corporation has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.