Graco (NYSE:GGG) Shares Gap Down on Disappointing Earnings

Shares of Graco Inc. (NYSE:GGG) gapped down prior to trading on Thursday following a dissappointing earnings announcement. The stock had previously closed at $81.81, but opened at $73.11. Graco shares last traded at $71.0050, with a volume of 452,727 shares traded.

The industrial products company reported $0.81 earnings per share for the quarter, missing the consensus estimate of $0.83 by ($0.02). The business had revenue of $586.39 million during the quarter, compared to analysts’ expectations of $590.17 million. Graco had a return on equity of 19.54% and a net margin of 23.53%. The company’s revenue was up 7.9% on a year-over-year basis. During the same quarter in the previous year, the company posted $0.73 earnings per share.

Graco Dividend Announcement

The firm also recently declared a quarterly dividend, which will be paid on Wednesday, November 4th. Stockholders of record on Monday, October 19th will be paid a $0.2950 dividend. This represents a $1.18 annualized dividend and a dividend yield of 1.7%. The ex-dividend date of this dividend is Monday, October 19th. Graco’s dividend payout ratio is 37.11%.

Key Graco News

Here are the key news stories impacting Graco this week:

• Positive Sentiment: Graco reported record third-quarter sales of $586.4 million, up 7.9% from the prior year. Earnings were also higher than last year at $0.81 per share versus $0.73, while operating cash flow remained positive at $165.5 million. Graco Reports Record Third Quarter Sales
• Positive Sentiment: Graco’s Electric Torque Machines subsidiary signed a technology licensing agreement with ABB for data-center cooling towers and heat-rejection systems. The partnership could provide exposure to expanding data-center infrastructure demand, although the financial contribution was not disclosed. Graco Announces Technology Partnership with ABB
• Neutral Sentiment: Institutional positioning was mixed in the latest reported quarter, with 337 investors adding Graco shares and 357 reducing their holdings. Insider activity was also balanced, with one reported purchase and one sale.
• Negative Sentiment: Third-quarter adjusted EPS of $0.81 missed the consensus estimate of $0.83, while revenue of $586.4 million was below the approximately $590.2 million forecast. The misses triggered a negative market reaction. Graco falls as third-quarter results miss estimates
• Negative Sentiment: Profitability weakened despite sales growth: operating profit fell 10.1% to $148.1 million, net income attributable to common shareholders declined 11.7% to $121.6 million, and diluted EPS decreased on a year-over-year basis in the detailed results. The combination of weaker earnings and margin pressure outweighed the record revenue. Graco shares fall after earnings and revenue miss

Analysts Set New Price Targets

A number of research firms have recently weighed in on GGG. Robert W. Baird set a $94.00 price target on Graco in a report on Friday, July 24th. Weiss Ratings upgraded shares of Graco from a “hold (c-)” rating to a “hold (c)” rating in a report on Tuesday, August 4th. Wolfe Research cut shares of Graco from an “outperform” rating to a “peer perform” rating in a research report on Thursday, July 9th. DA Davidson reaffirmed a “neutral” rating and issued a $85.00 target price on shares of Graco in a research report on Monday, July 27th. Finally, Royal Bank Of Canada lowered their target price on shares of Graco from $96.00 to $95.00 and set an “outperform” rating for the company in a research note on Wednesday, October 14th. Two equities research analysts have rated the stock with a Buy rating and five have issued a Hold rating to the company. Based on data from MarketBeat, the stock has a consensus rating of “Hold” and an average target price of $94.75.

Institutional Trading of Graco

A number of institutional investors and hedge funds have recently added to or reduced their stakes in GGG. Cassaday & Co Wealth Management LLC acquired a new position in Graco during the first quarter worth $26,000. Whipplewood Advisors LLC grew its stake in shares of Graco by 2,650.0% in the first quarter. Whipplewood Advisors LLC now owns 330 shares of the industrial products company’s stock valued at $28,000 after buying an additional 318 shares in the last quarter. Essential Partners LLC grew its stake in shares of Graco by 78.6% in the first quarter. Essential Partners LLC now owns 359 shares of the industrial products company’s stock valued at $30,000 after buying an additional 158 shares in the last quarter. Root Financial Partners LLC grew its stake in shares of Graco by 43.2% in the first quarter. Root Financial Partners LLC now owns 504 shares of the industrial products company’s stock valued at $43,000 after buying an additional 152 shares in the last quarter. Finally, Elevation Wealth Partners LLC raised its holdings in shares of Graco by 2,540.0% in the 2nd quarter. Elevation Wealth Partners LLC now owns 528 shares of the industrial products company’s stock valued at $40,000 after buying an additional 508 shares during the period. Hedge funds and other institutional investors own 93.88% of the company’s stock.

Graco Trading Down 12.8%

The stock has a market cap of $11.56 billion, a PE ratio of 22.44, a P/E/G ratio of 2.52 and a beta of 0.89. The company has a fifty day moving average of $78.78 and a 200-day moving average of $78.52.

About Graco

Graco Inc is a global manufacturer of equipment used to move, measure, control, dispense and apply fluids and other materials. Its products are used in industrial, commercial and residential applications involving paints, coatings, sealants, adhesives, lubricants, chemicals and other fluids.

The company’s product portfolio includes pumps, valves, meters, regulators, fluid-management systems, lubrication equipment, spray-applied coating and finishing systems, sealant and adhesive equipment, and contractor-oriented painting and texture application tools.