Graco Inc. GGG stands to gain from a diversified business structure with exposure to various end markets like general industrial, automotive, alternative energy, pharma, food & beverage, vehicle services, oil & natural gas, and others. Though supply-chain woes and high labor, logistics and raw material costs are weighing on GGG’s performance, a solid backlog level and product investments will be beneficial in the near term.
Graco’s Industrial segment is benefiting from improved factory movement and upgrades, automation, technology upgrades, energy-efficiency upgrades and material changes. Factory movements and upgrades, technology enhancements, energy-efficiency advancements and asset life maintenance are benefiting its Process segment. Product innovation and channel expansion, housing and new construction, and infrastructure spending are supporting the Contractor segment’s revenues.
Graco’s policy of investing in product innovation and capacity expansion should fuel its growth. It plans to invest $190 million in rolling out machinery and equipment during 2022, including $140 million in the expansion of facilities. In 2022, GGG invented products like ES 500 Stencil rig, LineLazer ES 500 electric battery-powered airless striper, et al.
GGG’s attractive shareholder-friendly policies work in its favor. It paid out dividends of $106.9 million in the first nine months of 2022 and repurchased shares worth $155.2 million in the same period. Also, the quarterly dividend rate was hiked 12% in December 2021.
Graco Inc. Price
Graco Inc. price | Graco Inc. Quote
In light of the above-mentioned positives, we believe, investors should hold on to the Graco stock for now, as is suggested by its current Zacks Rank #3 (Hold).
Key Picks
Some better-ranked companies from the Industrial Products sector are discussed below:
Enerpac Tool Group Corp. EPAC delivered a trailing four-quarter earnings surprise of 3.4%, on average. EPAC presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
EPAC’s earnings estimates have increased 9.1% for fiscal 2023 (ending August 2023) in the past 60 days. The stock has gained 23.7% in the past six months.
Applied Industrial Technologies, Inc. AIT presently has a Zacks Rank of #2 (Buy) and a trailing four-quarter earnings surprise of 24.8%, on average.
AIT’s earnings estimates have increased 3% for fiscal 2023 (ending June 2023) in the past 60 days. The stock has risen 31.7% in the past six months.
IDEX Corporation IEX presently has a Zacks Rank of 2. IEX’s earnings surprise in the last four quarters was 5.7%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 1.8% for 2022. The stock has rallied 27.1% in the past six months.
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