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.
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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%.
Graco Inc. Price, Consensus and EPS Surprise
Graco Inc. price-consensus-eps-surprise-chart | Graco Inc. Quote
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.
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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%.
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