Graco Inc.’s GGG fourth-quarter 2024 adjusted earnings of 64 cents per share missed the Zacks Consensus Estimate of 76 cents. The bottom line declined 20% year over year.

The company’s net sales of $548.7 million missed the consensus estimate of $554 million. The top line fell 3% year over year due to lower demand in the Industrial segment.

On a regional basis, quarterly sales generated from the Americas decreased 1% year over year. In Europe, the Middle East and Africa, sales decreased 2% year over year. Sales from the Asia Pacific decreased 10% year over year.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Segmental Details of Graco

Net sales in the Industrial segment totaled $165.7 million (contributing to 30.2% of the quarter’s sales), which decreased 14% year over year. Forex woes lowered sales by 1% year over year. Our estimate for segmental net sales was $191.8 million.

Net sales in the Process segment grossed $136.1 million (contributing to 24.8% of the quarter’s sales), flat year over year. Our estimate for the segment’s net sales was $131.6 million. Core sales remained flat on a year-over-year basis.

Net sales in the Contractor segment totaled $246.9 million (contributing to 45% of the quarter’s sales), up 3% year over year. Our estimate for segmental net sales was $236.5 million. However, Core sales decreased 3%.

Margin Profile of Graco

In the fourth quarter, Graco’s cost of sales increased 1% year over year to $269.4 million. Gross profit decreased 7% to $279.3 million and the margin declined two percentage points. Lower sales volume and higher product costs ailed the margin’s performance.

Operating income decreased 23% year over year to $130.0 million. The operating margin decreased 6.3 percentage points from the year-ago quarter. Interest expenses totaled $0.8 million compared with $0.7 million in the previous year’s quarter. The adjusted effective tax rate was 22% compared with the year-ago quarter’s 20%.

Graco’s Balance Sheet and Cash Flow

Exiting the fourth quarter, Graco had cash and cash equivalents of $675.3 million compared with $538 million at the end of 2023.

It generated net cash of $621.7 million from operating activities in 2024 compared with $651 million in the year-ago period. Capital used for purchasing property, plant and equipment totaled $106.7 million compared with $184.8 million in the year-ago period.

Graco paid out dividends worth $172.1 million to its shareholders in the year, up 8.7% from the previous year. It repurchased shares worth $31.4 million in the same period.

GGG’s 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

The company currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked companies are discussed below.

Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 (ending March 2025) earnings has remained steady.

Enersys ENS presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 1.6%.

In the past 60 days, the consensus estimate for ENS’ fiscal 2025 (ending March 2025) earnings has increased 8%.

Applied Industrial Technologies AIT presently carries a Zacks Rank of 2. AIT delivered a trailing four-quarter average earnings surprise of 5%.

In the past 60 days, the consensus estimate for AIT’s fiscal 2025 (ending June 2025) earnings has inched up 0.2%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report

Graco Inc. (GGG) : Free Stock Analysis Report

Graham Corporation (GHM) : Free Stock Analysis Report

Enersys (ENS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research