Graco (GGG) Stock Margins Impress As 23.5% Net Profit Challenges Cautious Growth Narratives

Graco (GGG) opened Q2 2026 with total revenue of $590.6 million and basic EPS of $0.89, set against trailing twelve month revenue of $2.3 billion and EPS of $3.23 that underpin the latest earnings story. The company has seen quarterly revenue move from $571.8 million in Q2 2025 to $590.6 million in Q2 2026, while quarterly EPS shifted from $0.77 to $0.89 over the same period, supported by a trailing twelve month net profit margin of 23.5% and earnings growth of 10.5% that point to solid profitability.

See our full analysis for Graco.

With the numbers on the table, the next step is to see how Graco’s latest results line up with the widely held narratives about its growth, margins, and overall quality.

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Margins Backed by 23.5% Net Profit

• Over the last 12 months, Graco generated net income of US$533.5 million on US$2.3b of revenue, which works out to a 23.5% net profit margin compared with 22.3% a year earlier.
• Consensus narrative highlights new products in the Contractor segment and benefits from the COROB acquisition as key supports for margins. The current 23.5% margin and 10.5% earnings growth leave room for investors to compare those product and acquisition ambitions with the already high profitability level.

EPS Growth vs Forecast Pace

• Trailing twelve month basic EPS is US$3.23, up from US$2.87 a year earlier, which is a 10.5% earnings increase compared with analysts’ forecasts in the data set of around 7.5% annual earnings growth and 7.1% revenue growth in the years ahead.
• Analysts’ consensus view sees Graco adding growth from share repurchases and COROB integration. The roughly 7 to 8% forecast growth rate is lower than the earnings growth over the last year, so investors can compare whether current momentum in EPS and margins can sustain those expectations or if the projected slower pace already reflects risks around tariffs and softer contractor and EMEA markets.
  • Consensus commentary points to new Contractor products and a strong U.S. manufacturing base as potential supports for future earnings, while the 10.5% trailing earnings growth shows how the business has recently translated operations into higher profits.
  • At the same time, forecast growth below the cited broader U.S. market benchmarks lines up with concerns that tariff exposure and mixed regional demand could moderate that pace from here.

Valuation Gap and Growth Trade off

• Graco shares are at US$77.75 compared with a DCF fair value estimate of about US$93.18 and an analyst price target of US$90.86, while the trailing P/E of 23.6x sits below the Machinery industry average of 27.9x and peer average of 29.5x, alongside a 1.52% dividend yield.
• Bears focus on tariff and acquisition related cost pressures and slower forecast growth than the U.S. market. The combination of a lower P/E than industry and peers with a DCF fair value and analyst target both above the current price creates a clear valuation versus growth trade off for investors weighing those risks.
  • Critics highlight that tariffs and higher product costs could pressure margins, which is one reason why forecasts sit around 7 to 8% growth even though recent earnings rose 10.5%.
  • Those same concerns help explain why the stock trades below both the DCF fair value of roughly US$93.18 and the US$90.86 analyst target despite the 23.5% net margin and dividend yield in place.

For a closer look at how optimists think Graco’s margin profile and new products could drive the next leg of growth, check out the 🐂 Graco Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Graco on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

If the optimism around Graco’s margins and earnings feels compelling, it is worth checking the underlying data yourself and not just the headline points. To see what those positives look like in detail, review the 4 key rewards.

See What Else Is Out There Beyond Graco

Graco’s forecasts point to earnings growth below cited broader U.S. market benchmarks, while tariff exposure and mixed regional demand could weigh on future progress.

If that slower outlook around Graco has you second guessing, use the 38 high quality undervalued stocks to quickly spot other companies where current prices already reflect stronger growth potential.

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.

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