Graco (GGG) shares have steadied in recent sessions, drawing attention from investors who are weighing the company’s steady long-term returns against its modest gains over the past month. The stock’s value dynamics continue to prompt ongoing discussion.
While Graco’s share price has seen modest movement recently, its year-to-date return hints at momentum picking back up, supported by decades of compounding for long-term holders. The one-year total shareholder return has been essentially flat but remains strong over the past three and five years, signaling resilience even as short-term sentiment shifts.
But with shares trading at a small discount to analyst targets and solid long-term growth in revenue and income, it prompts a key question: is Graco undervalued now, or is future growth already priced in?
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Most Popular Narrative: 8% Undervalued
At $84.86, Graco shares trade 8% below the most widely tracked fair value estimate of $92.44. This positions the stock as potentially underpriced if expected growth is realized.
The strategic decision to maintain a strong U.S. manufacturing footprint may give Graco an advantage over competitors who manufacture offshore. Especially in light of ongoing trade tensions and tariffs, this could potentially improve net margins due to cost control and pricing power.
Curious what powers this bullish call? The key is a chain reaction of profit margin gains, share buybacks, and a premium multiple typically reserved for high-growth leaders. Want to know how ambitious the future forecasts really are? Unlock the full narrative for the surprising assumptions driving this price target.
However, if tariffs or slowing contractor segment margins have a greater impact than expected, Graco’s earnings and valuation thesis could be challenged moving forward.
Taking a different angle, Graco shares currently trade at 29.1 times earnings, which is noticeably higher than both the industry average of 24.1 and the peer average of 25.6. The fair ratio for the company, based on market trends, would be 21 times earnings. This suggests that, even with quality fundamentals and growth, investors today are being asked to pay a higher price. This raises questions about whether future upside is already reflected in the price or if there are greater risks than the consensus view implies. Could this premium signal opportunity or caution?
If you want to challenge these takes or dive deeper into the numbers yourself, you can build your own perspective in just a few minutes. Do it your way
A good starting point is our analysis highlighting 1 key reward investors are optimistic about regarding Graco.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
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Designs, manufactures, and markets systems and equipment used to move, measure, mix, control, dispense, and spray fluid and powder materials in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
