Here's Why You Should Avoid Investing in Graco Stock Right Now

Graco Inc. GGG has failed to impress investors with its recent operational performance due to persistent weakness in the Industrial segment. Also, given the company’s extensive international presence, foreign currency headwind is an added uncertainty.Graco engages in designing, manufacturing and marketing equipment and systems used to measure, move, control, spray and dispense fluid as well as powder materials. The company offers equipment solutions for tough-to-handle materials with high viscosities, abrasive or corrosive properties and for multiple component materials that demand precise ratio control. GGG currently carries a Zacks Rank #4 (Sell). In the past year, the stock has gained 1.4% compared with the industry’s 11.8% growth.Image Source: Zacks Investment ResearchBusiness Weakness: Softness in the Industrial segment, due to a decline in finishing system sales in the Asia-Pacific region, is concerning for GGG. A decrease in demand for the company’s semiconductor, industrial lubrication and process transfer equipment products, owing to a weakness in the industrial sector, is also hampering the Process segment’s performance. The company expects organic net sales to decline in the low single-digits on a constant-currency basis for 2024.Rising Costs: High costs pose a threat to the company’s bottom line. In 2023, Graco’s selling, marketing and distribution costs increased 3.9% from the year-ago period. General and administrative expenses jumped 11.5% in the same period. Graco’s operating expenses increased 6% in 2023 due to incremental share-based compensation and increased spending on product development. The trend continued in the first nine months of 2024, with selling, marketing and distribution costs, and general and administrative expenses increasing 3.4% and 6.3%, respectively, year over year. The metrics, as a percentage of net sales, increased 90 basis points each, year over year, respectively.Forex Woes: Graco has operations in multiple nations. International expansion exposes it to risks arising from unfavorable movement in foreign currencies, geopolitical issues and other headwinds. In the first nine months of 2024, foreign currency translation had a negative impact of 1% on the Asia Pacific region’s revenues.Stocks to ConsiderSome better-ranked companies from the same space are discussed below.Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 8.4%.Applied Industrial Technologies, Inc. AIT currently carries a Zacks Rank #2 (Buy). AIT delivered a trailing four-quarter average earnings surprise of 8.2%.In the past 60 days, the Zacks Consensus Estimate for Applied Industrial’s fiscal 2025 earnings has increased 0.2%.Kadant Inc. KAI presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 17.2%. The Zacks Consensus Estimate for KAI’s 2024 earnings has increased 1.8% in the past 60 days.Just Released: Zacks Top 10 Stocks for 2024Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>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 Applied Industrial Technologies, Inc. (AIT): Free Stock Analysis Report Graco Inc. (GGG): Free Stock Analysis Report Kadant Inc (KAI): Free Stock Analysis Report Graham Corporation (GHM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks