Graco Shares Drop After Third-Quarter Shortfall and Cautious Fourth-Quarter Sales Outlook
Graco shares fell 15% after third-quarter adjusted EPS and revenue missed estimates and its fourth-quarter revenue guidance came in below consensus. Acquisitions accounted for half of the company’s 8% sales growth, while adjusted operating earnings rose only 1% as higher product costs absorbed price increases. Incoming organic orders rose 7%, leaving the fourth-quarter report to clarify whether costs or demand will dominate.
Graco’s quarterly adjusted profit was $0.81 per share, below the $0.84 consensus, while revenue reached $586.4 million versus $590.6 million expected. Its fourth-quarter sales forecast of $610 million to $640 million also trailed the $642.4 million consensus, even at the high end.
Acquisitions supplied four percentage points of Graco’s 8% sales increase, and adjusted operating earnings edged up 1% to $160.9 million as product costs offset pricing. Organic orders rose 7%. Before the report, shares traded at 23 times forward earnings; after the decline, the multiple was just under 20.
The share decline could affect investors exposed to Graco, including funds and individual holders, by reducing portfolio values. Employees and suppliers may face uncertainty if cost pressure persists and guidance remains cautious. For customers, pricing actions and product costs may influence equipment affordability. The mixed signals—soft outlook but higher organic orders—may also shape how other industrial companies are viewed, though the impact is likely company-specific rather than broad.