Why Graco's Shares Dropped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of equipment maker Graco (NYS: GGG) fell as much as 11% during trading today after releasing earnings last night.

So what: Revenue rose 8% to $234.1 million but earnings per share fell 5% to $0.58, below expectations. The results did include a $4 million charge related to the acquisition of ITW's finishing business.

Now what: The results weren't all that bad; expectations may have just gotten ahead of the company this quarter. The first quarter of last year was a record quarter and the company spent money investing in product development and invested $8 million in capital expenditures during the quarter. I think this is a blip in the long-term business and think a forward P/E ratio of 17 provides a good value after today's drop.

Interested in more info on Graco? Add it to your watchlist byclicking here.

At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.