Graco Earnings Preview

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While Graco (NYS: GGG) missed estimates last quarter, investors hope that it will bounce back and outpace Wall Street expectations this quarter. The company will unveil its latest earnings on Wednesday, Oct. 26. Graco provides fluid handling solutions to customers in the manufacturing, processing, construction, and maintenance industries throughout the world. It operates in three segments: industrial, contractor, and lubrication.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Graco with analysts unanimously rating it hold. Analysts don't like Graco as much as competitor Robbins & Myers overall. Six out of nine analysts rate Robbins & Myers a buy compared to zero of six for Graco. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $221.4 million in revenue this quarter. That would represent a rise of 16.5% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.57 per share. Estimates range from $0.50 to $0.70.

What our community says:
CAPS All-Stars are solidly backing the stock with 96.6% awarding it an "outperform" rating. The community at large backs the All-Stars with 96.6% giving it a rating of "outperform." Fools are gung-ho about Graco and haven't been shy with their opinions lately, logging 111 posts in the past 30 days. Even with a robust four out of five stars, Graco's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Graco's profit has risen year over year by an average of 66.7% over the past five quarters. The company raised its gross margin by 3.4 percentage points in the last quarter. Revenue rose 22.2% while cost of sales rose 13.4% to $102.2 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

56.4%

57.1%

54.6%

55.0%

Operating Margin

24.8%

26.2%

19.2%

22.9%

Net Margin

16.2%

17.1%

13.7%

16.0%

One final thing: If you want to keep tabs on Graco movements -- and for more analysis on the company -- make sure you add it to your Watchlist.

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At the time this article was published

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