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 aiding the Industrial segment’s performance. Also, higher demand for automotive OEM (original equipment manufacturer) and vehicle services bodes well. The Expansion Markets segment is gaining from solid momentum in the semiconductor and electric motor product applications businesses, driven by an increasing order rate. Favorable pricing actions also bode well.

The company aims to expand its market share, product offerings and customer base through strategic acquisitions. 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 4% to GGG’s sales in the fourth quarter of 2025.

The company is committed to rewarding its shareholders handsomely. In 2025, Graco paid out dividends worth $183.4 million to its shareholders, reflecting an increase of 6.6% year over year. In December 2025, GGG’s board of directors authorized an additional $15 million increase to its existing share repurchase program. This is in addition to the company’s share buyback program of December 2018, under which approximately 8 million shares remain available to be repurchased.

GGG’s Zacks Rank

In the past three months, this Zacks Rank #3 (Hold) company’s shares gained 2.5% compared with the industry’s 2% growth.

Image Source: Zacks Investment Research

However, high housing costs and lower construction projects in North America are affecting the performance of the 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 2025, Graco’s general and administrative expenses increased 7.7% year over year. Also, GGG’s cost of sales increased 7.3% year over year in 2025 due to higher product costs. The metric, as a percentage of net sales, increased 60 basis points year over year.

Stocks to Consider

Some better-ranked companies are discussed below.

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

Flowserve’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 17.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2026 earnings has increased 4.6%.

Nordson Corporation NDSN currently carries a Zacks Rank #2 (Buy). Nordson’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 2.5%.

In the past 60 days, the Zacks Consensus Estimate for Nordson’s fiscal 2026 earnings has increased 2%.

Parker-Hannifin Corporation PH currently carries a Zacks Rank of 2. Parker-Hannifin’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 6.8%.

In the past 60 days, the Zacks Consensus Estimate for Parker-Hannifin’s fiscal 2026 earnings has increased 0.7%.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.

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