Graco Inc. GGG remains committed to launching new products and upgrading existing ones in line with industry trends. In 2024, it introduced several innovative products, including the PowerShot XT electronic-powered airless paint gun, Stellair ACE, Stellair and E-Mix XT. In 2023, the company unveiled the InvisiPac HM10 hot melt adhesive dispensing system, an electric-powered airless gun and the Ultra QuickShot, a battery-powered airless paint sprayer. For product development, it invested $87.2 million in 2024 and $83 million in 2023. The combination of increased order rates and new product launches is expected to drive strong performance in the coming quarters.

GGG solidified its product portfolio and leveraged business opportunities through asset additions. In November 2024, Graco acquired Corob S.p.A. (Corob), which has been added to its Contractor segment. The inclusion of Corob’s strong product line, supported by its solid designing and manufacturing capabilities, will enable the company to expand its customer offerings and boost its position in the paint and coating machinery manufacturing market. In August 2024, it completed the acquisition of PCT System. The buyout enabled Graco to boost its White Knight business and will help expand its presence in the semiconductor market.

Graco has been making investments to boost growth of late. For instance, in 2023 and the first half of 2024, the company expanded its South Dakota manufacturing facility and built a new manufacturing facility in Sibiu, Romania. It also invested in the construction of a new facility in St. Gallen, Switzerland, that will look after the manufacturing operations for its powder division. This apart, the company started the expansion of its Minnesota facility. These projects signify significant investment in the expansion and modernization of GGG’s key manufacturing and distribution facilities.

GGG’s shareholder-friendly policies are encouraging. In 2024, Graco paid out dividends worth $172.1 million to its shareholders, reflecting an increase of 8.7% year over year. The company repurchased shares worth $31.4 million in 2024. In December 2024, it hiked its quarterly dividend by 7.8% to 27.5 cents per share.

In the past year, this Zacks Rank #3 (Hold) stock has gained 7.6%.

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Downsides of GGG

Softness in the Industrial segment, due to lower demand for sealants and adhesive products in the China region, is concerning for the company. A decrease in demand for its semiconductor products in the EMEA and Asia Pacific region, owing to a weakness in the industrial sector, is also hampering the Process segment’s performance. The Contractor segment is experiencing weakness due to softness in the U.S. housing and remodeling markets.

Escalating costs and expenses have been a concern for GGG over time. In 2024, Graco’s selling, marketing and distribution costs, and general and administrative expenses increased 5% and 11.6%, respectively, year over year. The metrics, as a percentage of net sales, increased 110 and 130 basis points year over year, respectively.

Stocks to Consider

Some better-ranked companies are discussed below.

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GHM delivered a trailing four-quarter average earnings surprise of 64.5%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has remained steady.

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In the past 60 days, the consensus estimate for AIT’s fiscal 2025 earnings has inched up 1.1%.

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

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