Graco’s fourth quarter results reflected stable execution, with performance meeting Wall Street’s expectations. Management attributed the 8% year-over-year sales growth to contributions from recent acquisitions, steady organic demand in both the Industrial and Contractor segments, and improved margins from targeted pricing actions. CEO Mark Sheahan highlighted that “improved performance in the home center channel and double-digit growth in the COROB business allowed contractors to achieve organic growth in every region this quarter.” Management also pointed to the successful integration of new businesses and disciplined expense management as major drivers of margin expansion.
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Graco (GGG) Q4 CY2025 Highlights:
- Revenue: $593.2 million vs analyst estimates of $591.1 million (8.1% year-on-year growth, in line)
- Adjusted EPS: $0.77 vs analyst estimates of $0.76 (in line)
- Adjusted EBITDA: $190.3 million vs analyst estimates of $181.8 million (32.1% margin, 4.6% beat)
- Operating Margin: 26.7%, up from 23.7% in the same quarter last year
- Market Capitalization: $14.42 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Graco’s Q4 Earnings Call
- Deane Dray (RBC Capital Markets) asked whether upfront license fees from electric motor technology would be recurring or lumpy, and CEO Mark Sheahan clarified that these revenues are expected to be irregular and are not factored into the organic growth outlook.
- Michael Halloran (Baird) questioned whether there was any pull-forward demand in Q4 for contractors, and Sheahan stated there was no unusual activity, noting only a modest lift in the home center channel.
- Saree Boroditsky (Jefferies) inquired about the impact and cost savings from the One Graco initiative, with Sheahan confirming approximately $15 million in realized savings and no further restructuring planned.
- Jeffrey Hammond (KeyBanc Capital Markets) asked for details on increased capital expenditures, and David Lowe, CFO, explained that the bulk relates to a new corporate headquarters and associated facility consolidation.
- Andrew Buscaglia (BNP Paribas) sought clarity on margin sustainability in Industrial and Expansion markets, with Sheahan emphasizing that margins remain strong and future upside is tied to higher volumes.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace and profitability of acquisition integration, especially the performance of COROB, Radia, and Color Service; (2) sustained operating margin improvements from the One Graco initiative; and (3) signs of volume recovery or further stabilization in core construction and industrial end markets. Execution on new product rollouts and the impact of pricing adjustments will also be important indicators.
Graco currently trades at $87.32, in line with $86.76 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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