$GGG · GRACO INC
Graco Inc. filed its Q3 FY2026 10-Q, reporting net sales of $586.4M (+7.9% YoY) and GAAP EPS of $0.75, down from $0.82 a year ago. Net earnings fell to $121.6M from $137.6M. Gross margin contracted to 50.5% from 53.2%, with the Industrial segment bearing the brunt of cost inflation — cost of products sold there rose 25.8% to $123.4M. The balance sheet shows cash dropping to $139.8M from $624.1M at year-end, reflecting $436.3M in acquisition spending (primarily Valco Melton) and $462.9M in share repurchases.
- Q3 GAAP EPS of $0.75 vs $0.82 a year ago — a 9.6% decline despite revenue rising 7.9% to $586.4M.
- Industrial segment operating earnings fell 7.8% YoY to $74.5M as cost of products sold surged 25.8% to $123.4M.
- Gross margin contracted to 50.5% from 53.2% a year ago, driven by Industrial cost inflation.
- Cash and equivalents plunged from $624.1M at year-end to $139.8M, largely due to $436.3M in acquisition spending.
- The company repurchased $462.9M in stock during the nine-month period, reducing shares outstanding by 5.9M.
Extended-hours trading shows GGG at $75.10, down 8.20% from the regular close of $81.81 — a sharp negative reaction to the margin-driven earnings miss on a $13.25B market cap.
Graco's 9.6% EPS decline despite 7.9% revenue growth signals a margin problem in its core Industrial segment that the market is punishing sharply after-hours.
Graco's margin squeeze in Industrial contrasts with the Contractor segment, where operating earnings grew 5.0% on 5.2% sales growth. The divergence suggests end-market-specific cost pressures rather than a broad industrial slowdown.
Industrial segment cost of products sold jumped 25.8% YoY to $123.4M, far outpacing the 10.9% revenue increase in that segment — if input-cost inflation persists, Industrial margins face further compression. The Valco Melton acquisition added $219.8M in goodwill and $158.6M in intangibles; any post-
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