Graco Stock Exhibits Strong Prospects Despite Persisting Headwinds

Graco Inc. GGG is benefiting from strength in the Industrial and Expansion Markets segments. An increase in demand for liquid finishing systems and sealants & adhesives product lines is supporting the Industrial segment’s performance. Also, higher demand for automotive OEM (original equipment manufacturer) and vehicle services bodes well for the segment. Solid momentum in the semiconductor and electric motor product applications businesses, driven by an increasing order rate, is aiding the Expansion Markets segment. Favorable pricing actions also bode well. Driven by strength across its businesses, Graco expects its 2025 revenues to grow in low single-digit from the year-ago level.

The company solidified its product portfolio and leveraged business opportunities through asset additions. In November 2025 GGG acquired Red Devil Equipment Company (Radia), which has been added to its Contractor segment. The acquisition is expected to strengthen the company’s presence in the color solutions space by incorporating Radia’s advanced mixing, shaking and automated material-handling equipment portfolio. In July 2025, Graco acquired Color Service S.r.l. (Color Service), which has been added to its Industrial segment. The addition of Color Service’s expertise in automated dosing systems allows the company to strengthen its powder handling portfolio and expand into new industries such as textiles, rubber, cosmetics, plastics and food. Acquisitions had a contribution of 6% to GGG’s sales in the third quarter of 2025.

GGG’s commitment to rewarding shareholders through dividends and share buybacks is encouraging. In the first nine months of 2025, Graco paid out dividends worth $137.8 million to its shareholders, reflecting an increase of 6.8% year over year. The company repurchased shares worth $361 million in the first nine months of 2025. In December 2025, GGG hiked its quarterly dividend by 7.3% to 29.5 cents per share.

GGG’s Zacks Rank

In the past three months, this Zacks Rank #3 (Hold) company’s shares gained 3.1% compared with the industry’s 3.6% growth.

Image Source: Zacks Investment Research

However, high housing costs and lower construction projects in North America are affecting the performance of the company’s Contractor segment. Reduced demand in the pro paint and home center channels, due to lower foot traffic and reduced consumer activity, arising from softness in the U.S. housing and remodeling markets, is concerning as well.

High costs pose a threat to the company’s bottom line. In the first nine months of 2025, Graco’s general and administrative expenses increased 9.6% year over year. Also, the company’s cost of sales rose 7.7% year over year in the first nine months due to higher product costs. The metric, as a percentage of net sales, increased 120 basis points year over year.

Stocks to Consider

Some better-ranked companies are discussed below:

Flowserve Corporation FLS currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FLS delivered a trailing four-quarter average earnings surprise of 10.5%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2025 earnings has increased 3%.

Helios Technologies, Inc. HLIO presently sports a Zacks Rank of 1. HLIO delivered a trailing four-quarter average earnings surprise of 16.8%.

In the past 60 days, the consensus estimate for Helios’ 2025 earnings has increased 2.5%.

Watts Water Technologies, Inc. WTS presently carries a Zacks Rank of 2. WTS delivered a trailing four-quarter average earnings surprise of 10.9%.

In the past 60 days, the consensus estimate for Watts Water’s 2025 earnings has increased 4.2%

Zacks' Research Chief Picks Stock Most Likely to "At Least Double"

Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com