Graco Reports Q4 Beat; Shares Surge 6%

Graco (NYSE: GGG) reported stronger-than-expected Q4 results, topping both earnings and revenue estimates. Backed by strong orders and record backlog, the robust results were driven by strong performance across all segments.

Shares of the American manufacturer of fluid-handling systems and products gained around 2% during the extended trading hours following the results.

Q4 Numbers

Q4 adjusted earnings of $0.69 per share grew 5% year-over-year and beat analysts’ expectations of $0.63 per share. The company reported earnings of $0.66 per share for the prior-year period.

Moreover, revenues jumped 15% year-over-year to $539.6 million and exceeded consensus estimates of $518.94 million. The increase in revenues reflected a surge in sales across regions with 13% growth in the Americas, 4% in EMEA, and 34% in the Asia Pacific.

However, gross profit margin weakened by 100 bps due to higher product costs as a result of ongoing supply chain issues and inflation offsetting favorable product and channel mix, realized pricing, and increased production volumes.

FY2022 Outlook & Organizational Structure Changes

For FY2022, the company is projecting sales growth in the high single-digits on an organic basis, based on positive expectations across all the regions and business segments.

Effective January 1, 2022, high-performance coatings and foam product offerings within the Applied Fluid Technologies division of the Industrial segment were realigned.

Going forward, the same will be managed under the Contractor segment and will be reported under the new organizational structure in the first quarter of 2022.

CEO Comments

Graco’s CEO, Mark Sheahan, commented, “While we still face supply chain, logistical and inflationary challenges, we are managing these headwinds and Graco is positioned well entering the new year.”

He further added, “Our pricing actions coupled with strong demand levels across all major end markets and product categories should set us up for another strong year.”

Wall Street’s Take

Following the Q4 results, one of the Top Analysts, Bryan Blair at Oppenheimer, maintained a Hold rating on Graco.

Overall, the stock has a Strong Buy consensus rating based on 3 Buys and 1 Hold. The average Graco price target of $86.33 implies 17.12% upside potential from current levels.

TipRanks’ Smart Score

Graco scores an 8 on 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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