Graco's New Segments, Cash Position Bolster Growth Prospects, RBC Says

MT Newswires Live04-28 00:04

Graco's (GGG) new segment structure and strong balance sheet give the company more room to invest and return cash to shareholders, supporting a steadier long-term growth profile, RBC Capital Markets said Sunday in a report.

At its May 5 investor day, the company is expected to offer more detail on its high-mix, low-volume manufacturing approach, which helps it deliver some of the best margins in the sector despite a cyclical product lineup of spray-finishing systems and pumps, the report said.

Multiyear growth opportunities include large US industrial and infrastructure projects and rising demand tied to electrification, the report said. Graco is expected to reiterate its long-term targets of 5% to 7% organic revenue growth and 12% annual earnings growth, RBC said.

A net cash position of $685 million gives the company flexibility for buybacks and acquisitions, though a weak housing market remains a near-term headwind, the report said.

RBC has an outperform rating on Graco stock with a $95 price target.

Price: 80.87, Change: -0.71, Percent Change: -0.87

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