NYSE:GGG
GRACO INC
A leading manufacturer of fluid handling systems providing essential pumps and spraying equipment for construction and agriculture industries worldwide.
Key Metrics
Investment Thesis
Bull Case
Investors may favor Graco due to its consistent profitability growth and strong free cash flow generation that supports aggressive capital return programs; The company's global footprint and diversified industrial exposure provide stability against economic downturns; Recent revenue expansion indicates successful penetration into key infrastructure and agricultural markets.
Bear Case
Concerns exist regarding the cyclical sensitivity of construction demand which could dampen future growth if macroeconomic conditions deteriorate; High levels of goodwill at $585.3M pose potential impairment risks if integration of acquisitions fails to meet expectations; Elevated capital expenditures of $45.7M alongside significant investing cash outflows suggest heavy ongoing investment requirements.
About GRACO INC
Graco Inc. designs and manufactures high-performance fluid handling solutions including pumps, valves, tanks, and spraying equipment primarily for the construction, industrial, and agricultural markets. The company serves global customers in infrastructure development, manufacturing automation, and farming sectors through its extensive product portfolio of spray guns, airless sprayers, and tankers.
Analysis
Management Discussion
The company reported robust financial performance with net profit reaching $521.8M in 2025, representing a 7.4% increase from the previous year despite revenue growth moderating slightly to $2.24B. Strong operating cash flow of $683.6M funded significant shareholder returns via $183.4M in dividends and $423.1M in share repurchases while maintaining a healthy balance sheet with $624.1M in cash.
Industry Overview
The global fluid handling equipment market is experiencing steady growth driven by infrastructure development and agricultural modernization demands; Competition remains fierce with established players focusing on technological innovation and sustainability; Regulatory changes regarding environmental compliance increasingly influence product design and manufacturing processes.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $2.14B | $2.20B | $2.11B | $2.24B |
| Cost of Revenue | $1.09B | $1.03B | $990.9M | $1.06B |
| Gross Profit | $1.06B | $1.16B | $1.12B | $1.17B |
| Operating Expenses | $484.7M | $514.2M | $552.4M | $548.4M |
| Operating Income | $572.7M | $646.8M | $570.1M | $624.8M |
| R&D | $80.0M | $82.8M | $87.2M | $82.3M |
| G&A | $153.8M | $171.4M | $191.4M | $206.2M |
| Marketing | $250.9M | $260.7M | $273.7M | $273.9M |
| Stock-Based Comp | $24.7M | $30.2M | $31.9M | $34.3M |
| D&A | $66.0M | $74.3M | $86.7M | $107.4M |
| Depreciation | $46.0M | $55.0M | $67.0M | $77.0M |
| Amortization | $18.9M | $17.6M | $19.0M | $28.0M |
| Other OpEx | $0 | $-800.0K | $0 | $-14.1M |
| Non-Operating Income | $-7.0M | $-38.0M | $19.2M | $16.4M |
| Interest Expense | $9.9M | $5.2M | — | — |
| Pre-Tax Income | $565.7M | $608.8M | $589.3M | $641.2M |
| Income Tax | $105.1M | $102.3M | $103.2M | $119.4M |
| Continuing Ops | $460.6M | $506.5M | $486.1M | $521.8M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $460.6M | $506.5M | $486.1M | $521.8M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $460.6M | $506.5M | $486.1M | $521.8M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $1.21B | $1.37B | $1.50B | $1.47B |
| Cash & Equivalents | $339.2M | $538.0M | $675.3M | $624.1M |
| Inventory | $476.8M | $438.3M | $404.7M | $401.1M |
| Prepaid Expenses | $24.9M | $20.5M | $29.8M | $31.4M |
| Other Current Assets | $364.7M | $369.0M | $387.6M | $415.3M |
| Long-Term Assets | $1.23B | $1.36B | $1.64B | $1.80B |
| PP&E (Net) | $607.6M | $741.7M | $771.7M | $755.1M |
| Intangibles | $137.5M | $126.3M | $233.3M | $303.9M |
| Goodwill | $368.2M | $370.2M | $487.5M | $585.3M |
| Operating Leases | $29.8M | $18.8M | $19.7M | $26.1M |
| Other LT Assets | $90.2M | $99.2M | $129.7M | $132.1M |
| Total Assets | $2.44B | $2.72B | $3.14B | $3.27B |
| Current Liabilities | $399.9M | $395.2M | $405.8M | $467.3M |
| Accounts Payable | $84.2M | $72.2M | $60.8M | $78.6M |
| Current Debt | $0 | — | — | $1.6M |
| Current Leases | $9.6M | $8.2M | $7.8M | $8.8M |
| Deferred Revenue | $50.7M | $51.6M | $52.5M | $94.0M |
| Taxes Payable | $16.0M | $9.8M | $8.1M | $15.5M |
| Other Current Liab | $199.4M | $210.5M | $230.0M | $220.1M |
| Long-Term Liabilities | $179.3M | $102.6M | $149.3M | $153.1M |
| Long-Term Debt | $75.0M | $0 | — | — |
| LT Operating Leases | $21.1M | $11.8M | $12.3M | $18.1M |
| Other LT Liab | $83.3M | $90.8M | $137.0M | $134.9M |
| Total Liabilities | $579.2M | $497.8M | $555.1M | $620.3M |
| Shareholders' Equity | $1.86B | $2.22B | $2.58B | $2.65B |
| Retained Earnings | $976.9M | $1.23B | $1.51B | $1.46B |
| AOCI | $-69.4M | $-35.0M | $-49.6M | $37.5M |
| Total L&E | $2.44B | $2.72B | $3.14B | $3.27B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $460.6M | $506.5M | $486.1M | $521.8M |
| Non-Cash Adjustments | $-173.0M | $218.5M | $248.3M | $204.6M |
| Working Capital Changes | $89.7M | $-74.0M | $-112.7M | $-42.9M |
| Cash from Operations | $377.4M | $651.0M | $621.7M | $683.6M |
| Capital Expenditures | $201.2M | $184.8M | $106.7M | $45.7M |
| Cash from Investing | $-226.8M | $-185.3M | $-342.8M | $-172.8M |
| Debt Issuances | $0 | — | — | — |
| Debt Repayments | $75.0M | $75.0M | $0 | — |
| Share Buybacks | $233.4M | $102.3M | $31.4M | $423.1M |
| Dividends Paid | $142.1M | $158.3M | $172.1M | $183.4M |
| Cash from Financing | $-434.4M | $-268.0M | $-139.9M | $-576.1M |
| FX Effect | $-1.3M | $1.0M | $-1.6M | $14.0M |
| Net Change in Cash | $-285.1M | $198.8M | $137.4M | $-51.3M |
| Beginning Cash | $624.3M | $339.2M | $538.0M | $675.3M |
| Ending Cash | $339.2M | $538.0M | $675.3M | $624.1M |
Frequently Asked Questions
How does GRACO INC make money?
Fluid Handling Solutions encompassing high-pressure pumps and valves for industrial applications; Spraying Equipment including airless sprayers and spray guns for construction and painting; Tank Systems featuring mobile and stationary tanks for chemical transport in farming and industry.
What are the main risks for GGG?
Cyclical nature of construction and industrial demand impacting revenue stability; Supply chain disruptions affecting the availability of raw materials for manufacturing; Intense competition from global manufacturers leading to potential margin compression.
What is GGG's competitive advantage?
Dominant market share in specialized fluid transfer technologies with a robust global distribution network; Strong brand recognition built on reliability and innovation in high-pressure pumping systems; Diversified product portfolio across multiple end-use industries reducing reliance on any single sector.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.