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Graco's Earnings Match Estimates in Q4, Sales Increase Y/Y
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Key Takeaways
GGG's Q4 adjusted earnings matched estimates, rising 20% year over year on higher sales and margins.
GGG's net sales rose 8%, supported by acquisitions and strong growth across Americas, EMEA, and Asia Pacific.
GGG expanded operating margin by 300 bps, aided by pricing gains despite higher product costs.
Graco Inc.’s (GGG - Free Report) fourth-quarter 2025 adjusted earnings of 77 cents per share came in line with the Zacks Consensus Estimate. The bottom line surged 20% year over year.
The company’s net sales of $593.2 million surpassed the consensus estimate of $585 million. Also, the top line increased 8% year over year due to incremental sales from acquired operations and sales growth across the Americas, EMEA and Asia Pacific regions.
On a regional basis, quarterly sales generated from the Americas increased 5% year over year. In Europe, the Middle East and Africa, sales increased 15% year over year. Sales from the Asia Pacific increased 11% year over year.
Segmental Details of Graco
Effective Jan. 1, 2025, Graco classified its business into three reportable segments, namely, the Contractor segment, Industrial segment and Expansion Markets segment.
Net sales in the Contractor segment totaled $265.5 million (contributing to 44.8% of the quarter’s sales), up 8% year over year. While acquisitions and currency translation had a positive impact of 5% and 2% on sales growth, respectively, organic sales increased 1%. Our estimate for segmental net sales was $274.8 million.
Net sales in the Industrial segment totaled $284.3 million (contributing to 47.9% of the quarter’s sales), which increased 11% year over year. Acquisitions had a positive impact of 4% on sales growth. While currency translation had a favorable impact of 2% on sales, organic sales increased 5%. Our estimate for segmental net sales was $260.8 million.
Net sales in the Expansion Markets segment grossed $43.4 million (contributing to 7.3% of the quarter’s sales), decreasing 6% year over year. While organic sales declined 7% on a year-over-year basis, currency translation had a favorable impact of 1% on sales. Our estimate for segmental net sales was $47 million.
In the fourth quarter, Graco’s cost of sales increased 6.3% year over year to $286.5 million. Gross profit increased 9.8% to $306.5 million, while the margin of 51.7% was up 80 basis points (bps) year over year. Margins were positively impacted by price realization, which was partially offset by higher product costs.
Operating income increased 22% year over year to $158.6 million. The operating margin increased 300 bps to 26.7% from the year-ago quarter. Interest expenses totaled $814 million compared with $794 million in the previous year’s quarter. The adjusted effective tax rate was 21.1% compared with the year-ago quarter’s 21.5%.
Graco’s Balance Sheet and Cash Flow
Exiting the fourth quarter, Graco had cash and cash equivalents of $624.1 million compared with $675.3 million at the end of 2024.
It generated net cash of $683.6 million from operating activities in 2025 compared with $621.7 million in the year-ago. Capital used for purchasing property, plant and equipment totaled $45.7 million compared with $106.7 million in the year-ago period.
Graco paid out dividends worth $183.4 million to its shareholders in the year, up 6.6% from the previous year. It repurchased shares worth $423.1 million in the same period.
2026 Outlook
The company expects organic sales to increase in the low single digits on a constant-currency basis in 2026. Sales are anticipated to grow in mid single digit including acquisitions.
Some better-ranked stocks from the same space are discussed below:
Flowserve Corporation (FLS - Free Report) presently carries a Zacks Rank #2 (Buy). Flowserve’s earnings surpassed the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 10.5%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2026 earnings has increased by a penny.
Nordson Corporation (NDSN - Free Report) currently carries a Zacks Rank of 2. Nordson’s earnings topped the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 2.2%. In the past 60 days, the Zacks Consensus Estimate for Nordson’s fiscal 2026 earnings has increased 2.3%.
Parker-Hannifin Corporation (PH - Free Report) presently carries a Zacks Rank of 2. Parker-Hannifin’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 6.2%. In the past 60 days, the Zacks Consensus Estimate for Parker-Hannifin’s fiscal 2026 earnings has inched up 0.6%.
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Graco's Earnings Match Estimates in Q4, Sales Increase Y/Y
Key Takeaways
Graco Inc.’s (GGG - Free Report) fourth-quarter 2025 adjusted earnings of 77 cents per share came in line with the Zacks Consensus Estimate. The bottom line surged 20% year over year.
The company’s net sales of $593.2 million surpassed the consensus estimate of $585 million. Also, the top line increased 8% year over year due to incremental sales from acquired operations and sales growth across the Americas, EMEA and Asia Pacific regions.
On a regional basis, quarterly sales generated from the Americas increased 5% year over year. In Europe, the Middle East and Africa, sales increased 15% year over year. Sales from the Asia Pacific increased 11% year over year.
Segmental Details of Graco
Effective Jan. 1, 2025, Graco classified its business into three reportable segments, namely, the Contractor segment, Industrial segment and Expansion Markets segment.
Net sales in the Contractor segment totaled $265.5 million (contributing to 44.8% of the quarter’s sales), up 8% year over year. While acquisitions and currency translation had a positive impact of 5% and 2% on sales growth, respectively, organic sales increased 1%. Our estimate for segmental net sales was $274.8 million.
Net sales in the Industrial segment totaled $284.3 million (contributing to 47.9% of the quarter’s sales), which increased 11% year over year. Acquisitions had a positive impact of 4% on sales growth. While currency translation had a favorable impact of 2% on sales, organic sales increased 5%. Our estimate for segmental net sales was $260.8 million.
Net sales in the Expansion Markets segment grossed $43.4 million (contributing to 7.3% of the quarter’s sales), decreasing 6% year over year. While organic sales declined 7% on a year-over-year basis, currency translation had a favorable impact of 1% on sales. Our estimate for segmental net sales was $47 million.
Graco Inc. Price, Consensus and EPS Surprise
Graco Inc. price-consensus-eps-surprise-chart | Graco Inc. Quote
Margin Profile of Graco
In the fourth quarter, Graco’s cost of sales increased 6.3% year over year to $286.5 million. Gross profit increased 9.8% to $306.5 million, while the margin of 51.7% was up 80 basis points (bps) year over year. Margins were positively impacted by price realization, which was partially offset by higher product costs.
Operating income increased 22% year over year to $158.6 million. The operating margin increased 300 bps to 26.7% from the year-ago quarter. Interest expenses totaled $814 million compared with $794 million in the previous year’s quarter. The adjusted effective tax rate was 21.1% compared with the year-ago quarter’s 21.5%.
Graco’s Balance Sheet and Cash Flow
Exiting the fourth quarter, Graco had cash and cash equivalents of $624.1 million compared with $675.3 million at the end of 2024.
It generated net cash of $683.6 million from operating activities in 2025 compared with $621.7 million in the year-ago. Capital used for purchasing property, plant and equipment totaled $45.7 million compared with $106.7 million in the year-ago period.
Graco paid out dividends worth $183.4 million to its shareholders in the year, up 6.6% from the previous year. It repurchased shares worth $423.1 million in the same period.
2026 Outlook
The company expects organic sales to increase in the low single digits on a constant-currency basis in 2026. Sales are anticipated to grow in mid single digit including acquisitions.
Zacks Rank and Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks from the same space are discussed below:
Flowserve Corporation (FLS - Free Report) presently carries a Zacks Rank #2 (Buy). Flowserve’s earnings surpassed the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 10.5%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2026 earnings has increased by a penny.
Nordson Corporation (NDSN - Free Report) currently carries a Zacks Rank of 2. Nordson’s earnings topped the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 2.2%. In the past 60 days, the Zacks Consensus Estimate for Nordson’s fiscal 2026 earnings has increased 2.3%.
Parker-Hannifin Corporation (PH - Free Report) presently carries a Zacks Rank of 2. Parker-Hannifin’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 6.2%. In the past 60 days, the Zacks Consensus Estimate for Parker-Hannifin’s fiscal 2026 earnings has inched up 0.6%.