Stock Analysis

When Should You Buy Graco Inc. (NYSE:GGG)?

NYSE:GGG
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Let's talk about the popular Graco Inc. (NYSE:GGG). The company's shares saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Graco’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Graco

Is Graco Still Cheap?

According to my valuation model, Graco seems to be fairly priced at around 19.52% above my intrinsic value, which means if you buy Graco today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $73.12, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, Graco’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of Graco look like?

earnings-and-revenue-growth
NYSE:GGG Earnings and Revenue Growth July 18th 2023

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 23% over the next couple of years, the future seems bright for Graco. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in GGG’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on GGG, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for Graco from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Graco, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.