Yahoo Finance Graco Inc. Recorded A 7.9% Miss On Revenue: Analysts Are Revisiting Their Models
As you might know, Graco Inc. (NYSE:GGG) last week released its latest first-quarter, and things did not turn out so great for shareholders. Graco missed analyst forecasts, with revenues of US$492m and statutory earnings per share (EPS) of US$0.71, falling short by 7.9% and 4.1% respectively. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Graco
After the latest results, the ten analysts covering Graco are now predicting revenues of US$2.24b in 2024. If met, this would reflect a satisfactory 3.8% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be US$3.00, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$2.25b and earnings per share (EPS) of US$3.14 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The consensus price target held steady at US$90.47, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Graco, with the most bullish analyst valuing it at US$110 and the most bearish at US$80.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Graco's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.1% growth on an annualised basis. This is compared to a historical growth rate of 7.8% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.5% annually. Even after the forecast slowdown in growth, it seems obvious that Graco is also expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Graco. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$90.47, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Graco going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Graco that you should be aware of.
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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.
