Graco's Q3 Earnings & Sales Miss Estimates, Increase Y/Y

Graco Inc.’s GGG third-quarter 2025 adjusted earnings of 73 cents per share missed the Zacks Consensus Estimate of 75 cents. The bottom line increased 3% year over year.

The company’s net sales of $543.4 million lagged the consensus estimate of $562 million. However, the top line increased 5% 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 2% year over year. In Europe, the Middle East and Africa, sales increased 12% year over year. Sales from the Asia Pacific increased 7% 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 $262.4 million (contributing to 48.3% of the quarter’s sales), up 8% year over year. While acquisitions had a positive impact of 11% on sales growth, organic sales declined 3%. Our estimate for segmental net sales was $275.5 million.

Net sales in the Industrial segment totaled $238.6 million (contributing to 43.9% of the quarter’s sales), which increased 1% year over year. Acquisitions had a positive impact of 1% on sales growth. While forex woes had a favorable impact of 2% on sales, organic sales fell 2%. Our estimate for segmental net sales was $239.3 million.

Net sales in the Expansion Markets segment grossed $42.4 million (contributing to 7.8% of the quarter’s sales), increasing 3% year over year. Organic sales increased 3% on a year-over-year basis. Our estimate for segmental net sales was $40.2 million.

Graco Inc. Price, Consensus and EPS Surprise

Graco Inc. price-consensus-eps-surprise-chart | Graco Inc. Quote

Margin Profile of Graco

In the third quarter, Graco’s cost of sales increased 4.5% year over year to $254.1 million. Gross profit increased 4.7% to $289.2 million, while the margin of 53.2% was relatively flat year over year. Margins were positively impacted by price realization and favorable product and channel mix, which were offset by higher product costs.

Operating income increased 12.9% year over year to $164.7 million. The operating margin increased 2.2 percentage points from the year-ago quarter. Interest expenses totaled $711 million compared with $656 million in the previous year’s quarter. The adjusted effective tax rate was 20% compared with the year-ago quarter’s 19%.

Graco’s Balance Sheet and Cash Flow

Exiting the third quarter, Graco had cash and cash equivalents of $618.7 million compared with $675.3 million at the end of 2024.

It generated net cash of $487.3 million from operating activities in the first nine months of 2025 compared with $436.5 million in the year-ago period. Capital used for purchasing property, plant and equipment totaled $33.6 million compared with $92.8 million in the year-ago period.

Graco paid out dividends worth $137.8 million to its shareholders in the year, up 6.8% from the previous year. It repurchased shares worth $361 million in the same period.

GGG’s 2025 Outlook

The company expects organic net sales to increase in the low single digits on a constant-currency basis in 2025.

GGG’s Zacks Rank and Other Stocks to Consider

The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks are discussed below:

Nordson Corporation NDSN presently carries a Zacks Rank of 2. NDSN’s earnings surpassed the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 3.2%. In the past 60 days, the Zacks Consensus Estimate for Nordson’s 2025 earnings has increased 1%.

RBC Bearings Incorporated RBC currently carries a Zacks Rank of 2. RBC has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, with an average surprise of 3.8%. In the past 60 days, the Zacks Consensus Estimate for RBC Bearings’ 2025 earnings has increased 0.1%.

Helios Technologies HLIO currently carries a Zacks Rank of 2. HLIO has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, with an average surprise of 15.5%.  In the past 60 days, the Zacks Consensus Estimate for Helios’ 2025 earnings has inched up 0.5%.

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This article originally published on Zacks Investment Research (zacks.com).

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