Graco Inc. GGG currently boasts robust prospects on a strong product portfolio, solid customer base, healthy liquidity position and a sound capital-deployment strategy.
The Zacks Rank #2 (Buy) company has a market capitalization of $13.6 billion. In the past six months, it has gained 5.7% compared with the industry’s growth of 3.2%.
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Let’s delve into the factors that make investment in the company a smart choice at the moment.
Strength in Business: Graco has been benefiting from strong demand for its products across all end markets. For instance, in the third-quarter 2021, the company’s sales from the Americas, Asia and the Europe, Middle East and Africa regions expanded 1.2%, 31.9% and 23.7%, respectively, on a year-over-year basis. For 2021, it expects organic sales to grow in the mid-to-high teens range.
Investments in Innovation: The company’s focus on investing in product innovation and capacity expansion bodes well. Some of the notable product introductions made by Graco in 2021 are SaniSpray HP 20 electrostatic sprayer, TapeLazer HP Automatic system, Intelligent Paint Kitchen, Voltex Dynamic Mix Valve, PerformAA air-assist and airless spray guns. In 2021, it is expected to have invested $150 million to roll out machinery and equipment, including $80 million for expanding facilities.
Healthy Liquidity Position: Graco’s ability to generate solid cash flows adds to its strength. In the first nine months of 2021, it generated net cash of $357.2 million from operating activities. Exiting the third quarter, the company had cash and cash equivalents of $603.8 million, reflecting a 25.1% increase on a sequential basis.
Rewards to Shareholders: It remains focused on rewarding shareholders through dividend payments. In the first nine months of 2021, the company paid dividends worth $95.2 million to its shareholders, up 8.6% from the year-ago period. The quarterly dividend rate was hiked by 12% in December 2021.
Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for Graco’s 2021 earnings has been stable at $2.41, while the consensus estimate for 2022 earnings increased from $2.66 to $2.71 on two upward estimate revisions against none downward.
Other Key Picks
Some other top-ranked companies from the same space are discussed below.
Helios Technologies, Inc. HLIO presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Its earnings surprise in the last four quarters was 37.54%, on average.
In the past 60 days, Helios’ earnings estimates have increased 7.9% for 2021 and 9.6% for 2022. Its shares have gained 34.1% in the past six months.
Ingersoll Rand Inc. IR presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 19.78%, on average.
In the past 60 days, Ingersoll Rand’s earnings estimates have increased 11.6% for 2021 and 7.9% for 2022. Its shares have gained 26% in the past six months.
Welbilt, Inc. WBT presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 172.50%, on average.
Welbilt’s earnings estimates have increased 8.6% for 2021 and 5.9% for 2022 in the past 60 days. Its shares have gained 1.6% in the past six months.
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