Core Insights - Graco Inc. reported revenue of $543.36 million for Q3 2025, a year-over-year increase of 4.7%, but fell short of the Zacks Consensus Estimate by 3.27% [1] - The company's EPS for the quarter was $0.73, compared to $0.71 a year ago, but also missed the consensus estimate of $0.75 by 2.67% [1] Financial Performance Metrics - Net sales in Expansion Markets reached $42.34 million, slightly above the estimated $42.2 million [4] - Contractor segment net sales were $262.43 million, compared to the estimated $279.44 million, reflecting an 8.3% increase year-over-year [4] - Industrial segment net sales were $238.59 million, slightly below the estimated $240.35 million, but showed a significant year-over-year increase of 52.7% [4] - Operating earnings for the Industrial segment were $80.73 million, close to the average estimate of $80.82 million [4] - Operating earnings for Expansion Markets were $10.39 million, exceeding the estimated $8.48 million [4] - Unallocated corporate expenses were reported at -$8.34 million, better than the average estimate of -$11.18 million [4] - Contractor segment operating earnings were $67.87 million, below the average estimate of $78.47 million [4] Stock Performance - Graco's shares have returned -1.3% over the past month, while the Zacks S&P 500 composite has increased by 1.1% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Core Insights - Graco Inc. reported quarterly earnings of $0.73 per share, missing the Zacks Consensus Estimate of $0.75 per share, representing an earnings surprise of -2.67% [1] - The company posted revenues of $543.36 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 3.27% [2] - Graco has surpassed consensus EPS estimates only once in the last four quarters and has underperformed the market with a 0.5% loss since the beginning of the year compared to the S&P 500's gain of 14.5% [3][2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.76 on revenues of $579.03 million, and for the current fiscal year, it is $2.97 on revenues of $2.24 billion [7] - The estimate revisions trend for Graco was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Manufacturing - General Industrial industry, to which Graco belongs, is currently in the bottom 42% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Graco's stock performance [5]

Financial Performance - Net sales for the third quarter of 2025 increased by 5% to $543.4 million, compared to $519.2 million in the same period of 2024[53] - Operating earnings rose by 13% to $164.7 million, while net earnings increased by 13% to $137.6 million for the third quarter[53] - The gross profit margin rate remained flat at 53.2% for the third quarter, despite higher product costs and lower margin rates from acquired operations[54][60] - Operating expenses decreased by 5% to $150.6 million, including a non-cash gain of $14 million from the reduction in fair value of acquisition-related contingent consideration[62] - The effective income tax rate was reported at 18.3% for the third quarter, with an adjusted effective tax rate of 20.4%[64] Sales by Region and Segment - Net sales in the Americas region were $341.0 million for the third quarter, with a 2% total growth driven by a 3% contribution from acquisitions[59] - The Contractor segment reported net sales of $262.4 million for the third quarter, with an operating margin rate of 26%[65] - Incremental sales from acquired operations contributed 6 percentage points to overall sales growth for the third quarter[54] - Industrial segment net sales increased by 1% for both the third quarter and year to date, with total sales of $238.6 million for the quarter and $712.5 million year to date[66] - Expansion Markets segment net sales rose by 3% for the third quarter and 4% year to date, totaling $42.4 million for the quarter and $124.5 million year to date[68] Operating Efficiency - Operating earnings as a percentage of net sales for the Industrial segment improved to 34% for the third quarter and year to date, up from 33% in the previous year[66] - Operating earnings as a percentage of net sales for the Expansion Markets segment increased to 25% for the third quarter, compared to 18% in the previous year[68] Cash Flow and Liquidity - Net cash provided by operating activities was $487 million in the first nine months of 2025, an increase of $51 million compared to the same period last year[69] - Significant cash uses included share repurchases of $361 million and dividend payments of $138 million in the first nine months of 2025[69] - As of September 26, 2025, the company had available liquidity of $1,399 million, including cash and cash equivalents of $619 million[71] Future Outlook and Risks - Capital expenditures for 2025 are expected to be approximately $50 to $60 million, with potential opportunistic share repurchases planned[72] - The company reaffirms its 2025 outlook of low single-digit sales growth on an organic constant-currency basis, supported by pricing actions and steady incoming order rates[73] - The company emphasizes the importance of considering various risk factors that may impact future results, including demand fluctuations and changes in currency rates[76] - The company anticipates that new tariffs will materially impact results in fiscal year 2025 if demand decreases or pricing strategies fail[52] - Higher product costs included increased tariff costs of $5 million for the quarter and $9 million year to date[60]

Core Points - Graco Inc. will release its Third Quarter 2025 earnings on October 22, 2025, after the NYSE closes [1] - A conference call to discuss the earnings will be held on October 23, 2025, at 11 a.m. EDT [1] - The earnings announcement will be available on the company's investor website [1][2] Company Overview - Graco Inc. specializes in technology and expertise for fluid management in industrial and commercial applications [3] - The company designs, manufactures, and markets systems and equipment for moving, measuring, controlling, dispensing, and spraying fluid and powder materials [3] - Graco is recognized as a leader in its field and serves customers globally in manufacturing, processing, construction, and maintenance industries [3]

Core Insights - Graco Inc. (NYSE: GGG) is experiencing a soft patch despite being a premium player in the fluid and coating management sector, leading to a failure in meeting market expectations for sales growth [1]. Group 1: Company Performance - Graco Inc. has commanded premium valuations but has not delivered on these expectations due to modest sales performance [1]. Group 2: Investment Opportunities - The investing group "Value In Corporate Events" focuses on identifying opportunities in major corporate events such as IPOs, mergers & acquisitions, and earnings reports, providing coverage of 10 significant events monthly [1].

Group 1 - Graco Inc. (GGG) is experiencing strong momentum in its Industrial and Expansion Markets segments, driven by robust demand for powder finishing and lubrication products, as well as increased vehicle service demand [1] - The semiconductor business is benefiting from a rising order rate, contributing positively to the Expansion Markets segment [1] - Graco has expanded its market share and product offerings through acquisitions, including Color Service S.r.l. and Corob S.p.A., enhancing its capabilities in the Industrial and Contractor segments [2][3] Group 2 - Graco's commitment to shareholders is evident through dividend payments totaling $92.2 million in the first half of 2025, a 7.2% increase year over year, and share repurchases amounting to $361 million [4] - The company increased its quarterly dividend by 7.8% to 27.5 cents per share in December 2024 [4] - Acquisitions contributed 6% to Graco's sales in Q2 2025, indicating a positive impact on revenue growth [3][8] Group 3 - The Contractor segment is facing challenges due to high housing costs and a decline in construction projects in North America, leading to reduced demand in the home center channel [5] - Graco is experiencing increased general and administrative expenses, which rose by 7.3% year over year in the first half of 2025, alongside a 9.3% increase in the cost of sales [6] - The company's cost of sales as a percentage of net sales increased by 170 basis points year over year [6] Group 4 - Graco operates in the Manufacturing - General Industrial industry, facing competition from companies like Flowserve Corporation, Graham Corporation, and Ingersoll Rand Inc. [7] - The company's product offerings include equipment and systems for measuring, moving, controlling, spraying, and dispensing fluid and powder materials [7]

Core Thesis - Graco Inc. is viewed positively due to its strong market position, premium product offerings, and resilient revenue streams, particularly from parts and accessories, which contribute to stable demand and high margins [2][3][4] Company Overview - Graco Inc. specializes in fluid handling equipment, focusing on challenging materials with high viscosities, abrasiveness, and corrosive properties [2] - Approximately 40% of Graco's revenue is derived from parts and accessories, providing a more stable revenue base [2] Financial Performance - Graco enjoys significant pricing power, leading to gross margins exceeding 50% and EBIT margins approaching 30% [3] - The stock was trading at $85.95 as of September 8th, with trailing and forward P/E ratios of 30.48 and 26.95 respectively [1] Market Position - The company has a disciplined management team and a durable position within its niche market, reinforcing its long-term prospects [3][4] - Graco's combination of premium products and high-margin operations positions it as a solid industrial leader capable of delivering consistent cash flow [4] Investment Opportunity - Recent stock underperformance has created an attractive valuation, presenting a compelling entry point for long-term investors seeking durable industrial growth [3][4] - The bullish thesis on Graco remains consistent, emphasizing its strong cash flow and defensible business model [6]

Dividend Announcements - Ralph Lauren has declared a quarterly dividend of $0.9125 per share, payable on October 10, 2025, to shareholders of record as of September 26, 2025 [1] - Graco's Board of Directors declared a quarterly dividend of $0.275 per share, payable on November 5, 2025, to shareholders of record as of October 20, 2025, with approximately 165.7 million shares outstanding [2] - TPG RE Finance Trust announced a cash dividend of $0.24 per share for Q3 2025, payable on October 24, 2025, to common stockholders of record as of September 26, 2025 [3] - Pegasystems announced a quarterly cash dividend of $0.03 per share, to be paid on October 15, 2025, to shareholders of record as of October 1, 2025 [4] - Bentley Systems declared a dividend of $0.07 per share for Q3 2025, payable on September 30, 2025, to all stockholders of record as of September 23, 2025 [5]

Core Points - Graco Inc. has declared a regular quarterly dividend of 27.5 cents ($0.275) per common share [1] - The dividend is payable on November 5, 2025, to shareholders of record at the close of business on October 20, 2025 [1] - The company has approximately 165.7 million shares outstanding [1] Company Overview - Graco Inc. supplies technology and expertise for the management of fluids and coatings in both industrial and commercial applications [1] - The company is involved in the design and manufacturing of related products [1]

Core Insights - Graco Inc. is experiencing growth in its Industrial and Expansion Markets segments, with core sales in the Industrial segment increasing by 2% year over year in the first half of 2025, driven by higher demand for powder finishing and lubrication products [1][8]. - The Expansion Markets segment saw a 4% year-over-year increase in core sales, supported by solid momentum in the semiconductor business and favorable pricing actions [1][8]. Acquisitions and Growth Strategy - Graco is focused on enhancing its capabilities through acquisitions, including the purchase of Color Service S.r.l. in July 2025, which will improve its powder handling portfolio [2]. - The acquisition of Corob S.p.A. in November 2024 and PCT System in August 2024 has strengthened Graco's offerings in the Contractor segment and semiconductor market, contributing 6% to sales in Q2 2025 [3]. Shareholder Returns - The company has demonstrated a commitment to shareholders by paying out $92.2 million in dividends in the first half of 2025, a 7.2% increase year over year, and repurchasing shares worth $361 million [4]. - In December 2024, Graco raised its quarterly dividend by 7.8% to 27.5 cents per share [4]. Segment Performance Challenges - The Contractor segment is facing challenges due to high housing costs and a decline in construction projects in North America, leading to a 3% year-over-year decline in core sales in the first half of 2025 [6]. - Reduced demand in the home center channel, attributed to lower foot traffic and decreased consumer activity, is also a concern for this segment [6]. Cost and Expense Trends - Graco has experienced rising costs, with general and administrative expenses increasing by 7.3% year over year and cost of sales rising by 9.3% in the first half of 2025 [9]. - The cost of sales as a percentage of net sales increased by 170 basis points year over year [9]. Stock Performance - Graco's shares have gained 2.8% over the past month, outperforming the industry growth of 0.7% [5].