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Graco to Benefit From Sturdy Project Activities & Buyouts

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On Nov 27, we issued an updated research report on Graco Inc. (GGG - Free Report) .

In the past month, this Zacks Rank #2 (Buy) stock has yielded 9% return, outperforming the industry’s growth of 5.8%.

 

Existing Scenario

Graco expects that sturdier project activity, stronger finishing products’ sales and elevated demand for all types of product application services, as well as improving home-center channel sales, will continue to drive its revenues in the upcoming quarters. For 2018, the company anticipates securing mid to high-single-digit organic revenue growth.

Graco is steadily improving its cash position over time. In the first nine months of 2018, the company’s free cash flow was $254 million, higher than $246 million recorded in the year-ago period. With increased liquidity, the company finances product innovation and capacity-expansion investments.

The company plans to invest $35 million for rolling out machinery and equipment in 2018. It also intends to deploy roughly $40 million over new production and distribution capacity-expansion projects.

Moreover, the company perceives that meaningful business acquisitions are likely to aid it in boosting revenues and profitability in the quarters ahead. For instance, in December 2017, it successfully acquired Smith Manufacturing in a bid to fortify its line striping and pavement maintenance equipment offerings. The company predicts that the buyout is likely to augment its aggregate revenues by $40 million in 2018.

Other Stocks to Consider

Some other top-ranked stocks from the same space are Luxfer Holdings PLC (LXFR - Free Report) , DXP Enterprises, Inc. (DXPE - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) . While Luxfer and DXP Enterprises sport a Zacks Rank #1 (Strong Buy), Applied Industrial Technologies carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Luxfer outpaced estimates thrice in the preceding four quarters, the average beat being 24.27%.

DXP Enterprises surpassed estimates thrice in the preceding four quarters, the average beat being 112.62%.

Applied Industrial Technologies outpaced estimates in each of the trailing four quarters, the average beat being 11.67%.

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