Graco Inc (GGG) Stock Analysis and Metrics

Graco

NYSE: GGG

$79.49 ▲ +1.74 (+2.24%)

At close: Jul 24, 2026 · 3:59 PM UTC

Financial Ratios

Market Cap13.02 Bn

P/E24.40

P/S5.74

Div. Yield0.01

ROIC (Qtr)1.06

Total Debt (Qtr)1.10 Mn

Revenue Growth (1y) (Qtr)3.28

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About

Graco Inc. designs manufactures and markets systems and equipment used to move measure mix control dispense and spray fluid and powder materials for industrial and commercial applications. The company serves manufacturing processing construction and maintenance industries with solutions for difficult to handle materials such as high viscosity abrasive or corrosive fluids and multi component mixtures requiring precise ratio control.

Graco Inc. generates revenue primarily through the sale of its fluid handling and coating equipment to end users and via third party distributors worldwide. Its product portfolio includes sprayers proportioning systems pumps lubrication equipment powder coating systems and specialized valves for sectors such as automotive aerospace construction and semiconductor manufacturing.

The company operates through the following segments Contractor Industrial and Expansion Markets.

• Contractor: This segment provides sprayers for paint and texture application equipment for road markings high performance volumetric and gravimetric dispensing mixing and shaking equipment and two component proportioning systems for polyurethane foam and polyurea coatings serving professional painters contractors and do it yourself users.

• Industrial: This segment includes the Industrial and Powder divisions offering liquid finishing and fluid dispensing equipment pumps for chemicals and food automatic lubrication systems and powder finishing systems under the Gema SAT and ColorService brands for automotive wood metal aerospace and general industrial manufacturers.

• Expansion Markets: This segment supplies pumps for semiconductor processing high pressure valves for oil and gas environmental monitoring and remediation equipment and design and licensing services for high torque electric motors used in HVAC pumps and material handling applications.

Graco Inc. holds a strong position in the niche markets of specialized fluid handling equipment competing with firms such as Graco’s rivals in the spray equipment pump and powder coating sectors where it leverages product innovation reliability and a global distributor network to maintain competitive advantage.

The company’s customer base consists of professional painters contractors maintenance personnel industrial manufacturers automotive and aerospace producers semiconductor fabricators oil and gas operators and distributors who resell its equipment to end users across the Americas EMEA and Asia Pacific regions.

Investment Thesis

▲ Bull case

Graco is positioned to capitalize on a strategic acquisition pipeline within its Industrial segment, where management highlighted renewed seller appetite and a well-populated M&A funnel focused on businesses where Graco can add value through integration and profitability enhancement. This is underscored by the recent definitive agreement to acquire Valco Melton for $447 million, a deal that expands capabilities in precision adhesive dispensing and vision-based quality assurance—areas directly complementary to Graco’s core fluid handling expertise. The acquisition aligns with Graco’s long-term strategy of targeting one-third of top-line growth from M&A, leveraging a proven track record since 2012 of integrating acquired businesses (now representing ~30% of 2025 revenue) while maintaining and improving profitability. Given that Industrial segment bookings were up mid-single digits in Q1 despite organic headwinds, and with double-digit booking gains in the Americas, the Valco Melton deal provides a catalyst to accelerate organic growth in high-margin industrial applications, particularly as project timing delays in EMEA and Asia Pacific begin to normalize. Management’s confidence in achieving low single-digit organic growth guidance is further bolstered by sequential quarterly improvement in order momentum and a $21 million backlog build in April alone, indicating that current order rates—despite quarterly lumpiness—are sufficient to drive second-half conversion and full-year target attainment. The company’s global manufacturing footprint also positions it to absorb incremental tariff impacts with limited net effect, as pricing actions have already offset most direct costs, and incoming Section 232 changes are expected to be manageable due to domestic production of finished goods.
Graco’s Expansion Markets segment, particularly its semiconductor and environmental businesses, is exhibiting strong leading indicators that management did not fully emphasize, signaling a potential inflection point in demand that could offset ongoing softness in traditional Contractor channels. Despite a 5% organic revenue decline in Expansion Markets Q1—driven by lapping a prior-year 51% surge in semiconductor—the business recorded bookings up at least 20% in each region during the quarter, with environmental business showing meaningful pickup and positive year-to-date bookings momentum. This booking strength, combined with improving quoting activity throughout Q1, suggests that the semiconductor business is not experiencing demand deterioration but rather a normalization after an exceptional prior-year comparable, setting up for easier year-over-year comparisons in subsequent quarters. Furthermore, the environmental business, while slow to start the year, is now demonstrating improved activity and a strong start to Q2, indicating that Graco’s diversification into adjacent growth areas is beginning to yield traction. Management noted that second-half comparisons are more favorable due to an easier Contractor comparison in Q3 and expected timing of industrial project activity toward year-end, but the underappreciated strength in Expansion Markets—particularly semiconductor and environmental—could provide a more durable and accelerating growth tailwind than currently priced into expectations, especially as global investments in semiconductor fabrication and sustainability-driven manufacturing continue to expand.

Graco is positioned to capitalize on a strategic acquisition pipeline within its Industrial segment, where management highlighted renewed seller appetite and a well-populated M&A funnel focused on businesses where Graco can add value through integration and profitability enhancement. This is underscored by the recent definitive agreement to acquire Valco Melton for $447 million, a deal that expands capabilities in precision adhesive dispensing and vision-based quality assurance—areas directly complementary to Graco’s core fluid handling expertise. The acquisition aligns with Graco’s long-term strategy of targeting one-third of top-line growth from M&A, leveraging a proven track record since 2012 of integrating acquired businesses (now representing ~30% of 2025 revenue) while maintaining and improving profitability. Given that Industrial segment bookings were up mid-single digits in Q1 despite organic headwinds, and with double-digit booking gains in the Americas, the Valco Melton deal provides a catalyst to accelerate organic growth in high-margin industrial applications, particularly as project timing delays in EMEA and Asia Pacific begin to normalize. Management’s confidence in achieving low single-digit organic growth guidance is further bolstered by sequential quarterly improvement in order momentum and a $21 million backlog build in April alone, indicating that current order rates—despite quarterly lumpiness—are sufficient to drive second-half conversion and full-year target attainment. The company’s global manufacturing footprint also positions it to absorb incremental tariff impacts with limited net effect, as pricing actions have already offset most direct costs, and incoming Section 232 changes are expected to be manageable due to domestic production of finished goods.
Graco’s Expansion Markets segment, particularly its semiconductor and environmental businesses, is exhibiting strong leading indicators that management did not fully emphasize, signaling a potential inflection point in demand that could offset ongoing softness in traditional Contractor channels. Despite a 5% organic revenue decline in Expansion Markets Q1—driven by lapping a prior-year 51% surge in semiconductor—the business recorded bookings up at least 20% in each region during the quarter, with environmental business showing meaningful pickup and positive year-to-date bookings momentum. This booking strength, combined with improving quoting activity throughout Q1, suggests that the semiconductor business is not experiencing demand deterioration but rather a normalization after an exceptional prior-year comparable, setting up for easier year-over-year comparisons in subsequent quarters. Furthermore, the environmental business, while slow to start the year, is now demonstrating improved activity and a strong start to Q2, indicating that Graco’s diversification into adjacent growth areas is beginning to yield traction. Management noted that second-half comparisons are more favorable due to an easier Contractor comparison in Q3 and expected timing of industrial project activity toward year-end, but the underappreciated strength in Expansion Markets—particularly semiconductor and environmental—could provide a more durable and accelerating growth tailwind than currently priced into expectations, especially as global investments in semiconductor fabrication and sustainability-driven manufacturing continue to expand.

▼ Bear case

Graco faces persistent structural headwinds in its Contractor segment, where management acknowledged ongoing softness in traditional paint and home center channels despite noting bright spots in foam, polyurea, and protective coatings tied to infrastructure and data center projects. The segment’s organic revenue declined 4% in Q1, with housing starts expected to remain flat year-over-year and only modest improvement in existing home sales—a trend management described as having shown “limited growth over the past four years” with expectations for persistence in 2026. This enduring weakness is exacerbated by sell-through dynamics in key channels, where retail demand remains close to wholesale and channel partners continue to manage inventory conservatively, limiting Graco’s ability to drive incremental growth through new product launches, which are expected to be similar to 2025 levels without large incremental increases. While management pointed to foot traffic in home centers not deteriorating year-over-year, it remains off 2021 record levels, and the opportunity for recovery remains unproven, suggesting that any rebound in Contractor demand is speculative and not yet reflected in current order patterns. Furthermore, the company’s reliance on infrastructure-related opportunities in protective coatings—while positive—is insufficient to offset broad-based softness in core Contractor end markets, especially as governmental spending on projects like border walls may face political or budgetary constraints, introducing uncertainty around the sustainability of these niche growth areas.
Graco’s Industrial segment is vulnerable to project timing delays and execution risk in EMEA and Asia Pacific, which directly contributed to an 8% organic revenue decline in Q1 despite 8% acquisition-driven growth and 4% currency tailwinds, with management attributing the shortfall to the timing of completion and acceptance of project-based activity rather than demand deterioration. Although booking levels improved as the quarter progressed and quoting levels moved higher in these regions, the company remains exposed to slippage in backlog conversion, where orders booked late in the quarter may not convert to revenue until future periods, creating revenue lumpiness and potential misses if project acceptance is delayed beyond expectations. Management’s confidence in second-half backlog conversion hinges on the assumption that current order momentum will materialize, but this assumes no meaningful increase in project cancellations or supply chain disruptions—despite David Lowe’s assertion that cancellation risk is low in legacy businesses due to equipment being ordered late in project cycles, the Gema powder equipment business, while requiring meaningful down payments, still faces inherent risk in long-cycle industrial projects where macroeconomic shifts or customer capital expenditure pauses could jeopardize committed orders. Additionally, the company’s guidance assumes low single-digit organic growth at constant currency, but this relies on overcoming a weak Q1 start, implying mid-single-digit-ish growth through the remainder of the year—a challenging feat if project timing delays persist or if the anticipated improvement in EMEA and Asia Pacific fails to materialize at the expected pace, leaving Graco vulnerable to downward revisions if second-half performance does not align with the currently optimistic conversion timeline.

Graco faces persistent structural headwinds in its Contractor segment, where management acknowledged ongoing softness in traditional paint and home center channels despite noting bright spots in foam, polyurea, and protective coatings tied to infrastructure and data center projects. The segment’s organic revenue declined 4% in Q1, with housing starts expected to remain flat year-over-year and only modest improvement in existing home sales—a trend management described as having shown “limited growth over the past four years” with expectations for persistence in 2026. This enduring weakness is exacerbated by sell-through dynamics in key channels, where retail demand remains close to wholesale and channel partners continue to manage inventory conservatively, limiting Graco’s ability to drive incremental growth through new product launches, which are expected to be similar to 2025 levels without large incremental increases. While management pointed to foot traffic in home centers not deteriorating year-over-year, it remains off 2021 record levels, and the opportunity for recovery remains unproven, suggesting that any rebound in Contractor demand is speculative and not yet reflected in current order patterns. Furthermore, the company’s reliance on infrastructure-related opportunities in protective coatings—while positive—is insufficient to offset broad-based softness in core Contractor end markets, especially as governmental spending on projects like border walls may face political or budgetary constraints, introducing uncertainty around the sustainability of these niche growth areas.
Graco’s Industrial segment is vulnerable to project timing delays and execution risk in EMEA and Asia Pacific, which directly contributed to an 8% organic revenue decline in Q1 despite 8% acquisition-driven growth and 4% currency tailwinds, with management attributing the shortfall to the timing of completion and acceptance of project-based activity rather than demand deterioration. Although booking levels improved as the quarter progressed and quoting levels moved higher in these regions, the company remains exposed to slippage in backlog conversion, where orders booked late in the quarter may not convert to revenue until future periods, creating revenue lumpiness and potential misses if project acceptance is delayed beyond expectations. Management’s confidence in second-half backlog conversion hinges on the assumption that current order momentum will materialize, but this assumes no meaningful increase in project cancellations or supply chain disruptions—despite David Lowe’s assertion that cancellation risk is low in legacy businesses due to equipment being ordered late in project cycles, the Gema powder equipment business, while requiring meaningful down payments, still faces inherent risk in long-cycle industrial projects where macroeconomic shifts or customer capital expenditure pauses could jeopardize committed orders. Additionally, the company’s guidance assumes low single-digit organic growth at constant currency, but this relies on overcoming a weak Q1 start, implying mid-single-digit-ish growth through the remainder of the year—a challenging feat if project timing delays persist or if the anticipated improvement in EMEA and Asia Pacific fails to materialize at the expected pace, leaving Graco vulnerable to downward revisions if second-half performance does not align with the currently optimistic conversion timeline.

Geographical Breakdown of Revenue (2025)

Peer Comparison

Companies in the Specialty Industrial Machinery

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	GEV	GE Vernova Inc.	270.93 Bn	28.46	6.55	2.79 Bn
2	ETN	Eaton Corp plc	156.55 Bn	39.19	5.50	21.05 Bn
3	PH	Parker-Hannifin Corp	124.04 Bn	35.64	5.91	9.58 Bn
4	CMI	Cummins Inc	91.66 Bn	34.29	2.70	6.89 Bn
5	EMR	Emerson Electric Co	82.90 Bn	67.34	4.53	13.36 Bn
6	ITW	Illinois Tool Works Inc	81.54 Bn	26.02	5.03	9.15 Bn
7	AME	Ametek Inc/	55.40 Bn	36.26	7.29	2.18 Bn
8	ROK	Rockwell Automation, Inc	51.78 Bn	53.05	5.88	3.69 Bn

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Investment Thesis

Segments Breakdown of Revenue (2025)

Geographical Breakdown of Revenue (2025)

Peer Comparison

Research Tools

Developers

About

Investment Thesis

Segments Breakdown of Revenue (2025)

Geographical Breakdown of Revenue (2025)

Peer Comparison

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