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Graco reported Q1 EPS of 66 cents, missing estimates, while sales rose 2% but lagged forecasts.
GGG saw a 6% organic sales decline, offset by acquisitions and currency tailwinds.
Margins fell on weak mix and costs, though backlog rose 13% and outlook remains intact.
Graco Inc. (GGG - Free Report) reported first-quarter 2026 adjusted earnings of 66 cents per share, down 6% from 70 cents in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 75 cents by 12%.
The company’s net sales rose 2% year over year to $540.1 million but lagged the consensus estimate of $560 million by 3.5%. Organic order backlog rose 13% from the end of 2025.
On a regional basis, quarterly sales generated from the Americas increased 3% year over year. In Europe, the Middle East and Africa, sales increased 4% year over year. Sales from the Asia Pacific decreased 5% year over year.
Acquisitions Offset Organic Slide
Graco’s acquired operations had a contribution of $26 million to sales growth, while currency translation added roughly $17 million. These tailwinds more than offset a 6% organic decline that management tied to softer construction markets and project timing.
Management highlighted that incoming order rates increased as the quarter progressed, and the company exited the quarter with a solid order trend. This supported the increase in organic order backlog relative to 2025-end.
Contractor segment sales increased 2% year over year to $260 million, as infrastructure-related demand held up better than residential construction activity. While acquisitions and currency translation both had a positive impact of 3% on sales growth, organic sales decreased 4%.
Industrial segment sales rose 4% to $240.4 million, supported by acquired businesses but weighed down by powder finishing system completions and other projects. Acquisitions had a positive impact of 8% on sales growth. While currency translation had a favorable impact of 4% on sales, organic sales decreased 8%.
Expansion Markets sales decreased 4% to $39.7 million, owing to a decrease in semiconductor application sales in the Americas. While organic sales declined 5% on a year-over-year basis, currency translation had a favorable impact of 1% on sales.
Margin Profile of Graco
In the first quarter, Graco’s cost of sales increased 3.6% year over year to $259.5 million. Gross profit increased 1% to $280.6 million, while the margin of 52% was down 60 basis points (bps) year over year. Margins were hurt due to adverse product and channel mix and the soft margin profile of acquired assets.
Operating income decreased 4% year over year to $137.8 million. The operating margin decreased 180 bps to 25.5% from the year-ago quarter. Interest expenses totaled $836 million compared with $713 million in the previous year’s quarter. The adjusted effective tax rate was 15% compared with the year-ago quarter’s 18%.
Graco’s Balance Sheet and Cash Flow
Graco ended the quarter with $712.2 million in cash and cash equivalents, up from $624.1 million at the end of 2025. It generated net cash of $120.2 million from operating activities in the first three months of 2026 compared with $125.4 million in the year-ago period. Capital used for purchasing property, plant and equipment totaled $12.1 million compared with $10.6 million in the year-ago period.
Graco paid out dividends worth $48.9 million to its shareholders in the year, up 0.4% from the year-ago period. It repurchased shares worth $11.8 million in the same period.
2026 Outlook
Graco continues to expect organic sales to increase in the low single digits on a constant-currency basis in 2026. Sales are anticipated to grow in mid-single digits, including acquisitions. It expects to incur capital expenditure of roughly $90-$100 million for 2026, and the effective tax rate is projected to be 20-21% for second-quarter and 2026.
Zacks Rank and Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are discussed below:
DXP Enterprises’ earnings surpassed the consensus estimate by 52.8% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for DXPE’s 2026 earnings has increased by 17.2%.
Nordson Corporation (NDSN - Free Report) currently carries a Zacks Rank of 2 (Buy). Nordson’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 2.5%. In the past 60 days, the Zacks Consensus Estimate for Nordson’s fiscal 2026 earnings has increased 1.8%.
RBC Bearings (RBC - Free Report) presently carries a Zacks Rank of 2. RBC Bearings’ earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 5.3%. In the past 60 days, the Zacks Consensus Estimate for RBC Bearings’ fiscal 2026 earnings has inched down 0.3%.
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Graco Misses Q1 Earnings & Sales Estimates, Retains 2026 View
Key Takeaways
Graco Inc. (GGG - Free Report) reported first-quarter 2026 adjusted earnings of 66 cents per share, down 6% from 70 cents in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 75 cents by 12%.
The company’s net sales rose 2% year over year to $540.1 million but lagged the consensus estimate of $560 million by 3.5%. Organic order backlog rose 13% from the end of 2025.
On a regional basis, quarterly sales generated from the Americas increased 3% year over year. In Europe, the Middle East and Africa, sales increased 4% year over year. Sales from the Asia Pacific decreased 5% year over year.
Acquisitions Offset Organic Slide
Graco’s acquired operations had a contribution of $26 million to sales growth, while currency translation added roughly $17 million. These tailwinds more than offset a 6% organic decline that management tied to softer construction markets and project timing.
Management highlighted that incoming order rates increased as the quarter progressed, and the company exited the quarter with a solid order trend. This supported the increase in organic order backlog relative to 2025-end.
Graco Inc. Price, Consensus and EPS Surprise
Graco Inc. price-consensus-eps-surprise-chart | Graco Inc. Quote
Graco Segment Sales Show Mixed End Markets
Contractor segment sales increased 2% year over year to $260 million, as infrastructure-related demand held up better than residential construction activity. While acquisitions and currency translation both had a positive impact of 3% on sales growth, organic sales decreased 4%.
Industrial segment sales rose 4% to $240.4 million, supported by acquired businesses but weighed down by powder finishing system completions and other projects. Acquisitions had a positive impact of 8% on sales growth. While currency translation had a favorable impact of 4% on sales, organic sales decreased 8%.
Expansion Markets sales decreased 4% to $39.7 million, owing to a decrease in semiconductor application sales in the Americas. While organic sales declined 5% on a year-over-year basis, currency translation had a favorable impact of 1% on sales.
Margin Profile of Graco
In the first quarter, Graco’s cost of sales increased 3.6% year over year to $259.5 million. Gross profit increased 1% to $280.6 million, while the margin of 52% was down 60 basis points (bps) year over year. Margins were hurt due to adverse product and channel mix and the soft margin profile of acquired assets.
Operating income decreased 4% year over year to $137.8 million. The operating margin decreased 180 bps to 25.5% from the year-ago quarter. Interest expenses totaled $836 million compared with $713 million in the previous year’s quarter. The adjusted effective tax rate was 15% compared with the year-ago quarter’s 18%.
Graco’s Balance Sheet and Cash Flow
Graco ended the quarter with $712.2 million in cash and cash equivalents, up from $624.1 million at the end of 2025. It generated net cash of $120.2 million from operating activities in the first three months of 2026 compared with $125.4 million in the year-ago period. Capital used for purchasing property, plant and equipment totaled $12.1 million compared with $10.6 million in the year-ago period.
Graco paid out dividends worth $48.9 million to its shareholders in the year, up 0.4% from the year-ago period. It repurchased shares worth $11.8 million in the same period.
2026 Outlook
Graco continues to expect organic sales to increase in the low single digits on a constant-currency basis in 2026. Sales are anticipated to grow in mid-single digits, including acquisitions. It expects to incur capital expenditure of roughly $90-$100 million for 2026, and the effective tax rate is projected to be 20-21% for second-quarter and 2026.
Zacks Rank and Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are discussed below:
DXP Enterprises (DXPE - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DXP Enterprises’ earnings surpassed the consensus estimate by 52.8% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for DXPE’s 2026 earnings has increased by 17.2%.
Nordson Corporation (NDSN - Free Report) currently carries a Zacks Rank of 2 (Buy). Nordson’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 2.5%. In the past 60 days, the Zacks Consensus Estimate for Nordson’s fiscal 2026 earnings has increased 1.8%.
RBC Bearings (RBC - Free Report) presently carries a Zacks Rank of 2. RBC Bearings’ earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 5.3%. In the past 60 days, the Zacks Consensus Estimate for RBC Bearings’ fiscal 2026 earnings has inched down 0.3%.