Graco Q3 Sales Up 8% to $586M; Adjusted EPS $0.81, Q4 Guided to $610-640M
GGG is trading near its 52-week low of $72.513 (5.7% above the low).
Summary
Graco posted 8% Q3 sales growth to $586.4M and adjusted EPS of $0.81, but GAAP earnings fell 12% on margin pressure and the absence of a prior-year gain. The $462M Valco Melton deal drained cash to $140M, and Q4 sales are guided to $610-640M.
Key Events · Earnings and Guidance · GGG
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Q3 Sales Up 8%, Earnings Down 12%
Net sales rose to $586.4M from $543.4M, with 4 points organic and 4 points from acquisitions. GAAP net earnings fell to $121.6M ($0.75 diluted) from $137.6M, while adjusted EPS rose to $0.81 from $0.77.
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Gross Margin Slips ~3 Points
Gross margin fell to 50.5% from 53.2% on higher product costs, lower-margin acquired operations and unfavorable mix. Industrial segment operating margin dropped 6 points to 28%.
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Valco Melton Closes for $462M Cash
The Aug 31 acquisition added $12M of sales and a $5M operating loss in the period; preliminary allocation includes $220M goodwill and $159M intangibles. Cash fell to $140M from $624M at year-end 2025 after $219M of revolver draws.
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Q4 Sales Guided to $610-640M
Fourth-quarter total company sales are estimated at $610M-$640M including Valco Melton, versus $586.4M in Q3. Incoming organic orders rose 7% in the quarter and 4% year to date.
Analysis · GGG · Technology
The growth engine is still running, but Graco's margin story is deteriorating. Sales rose 8% (4 points organic, 4 from acquisitions), yet GAAP operating earnings fell 10% and net earnings dropped 12% to $121.6M, largely because last year's $14M non-cash contingent-consideration gain did not repeat. Adjusted EPS of $0.81 beat last year's $0.77, but gross margin slid about 3 points to 50.5% on higher product costs and lower-margin acquired business. The bigger balance-sheet shift is the $462M cash Valco Melton acquisition, funded partly by $219M drawn on the revolver, which cut cash from $624M to $140M; $808M of total liquidity still covers the plan. Q4 guidance of $610-640M brackets the $586M just reported, and the new ABB license puts Graco's motor technology into data-center cooling — a genuinely new end market.
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At the time of this filing, GGG was trading at $76.61 on NYSE in the Technology sector, with a market capitalization of approximately $13.2B. The 52-week trading range was $72.51 to $95.69. This filing was assessed with neutral market sentiment and an importance score of 7 out of 10.