Graco Beats EPS, Revenues Surge - Analyst Blog
October 25 2012 - 6:50AM
Zacks
Graco Inc. (GGG)
reported third quarter 2012 earnings per share of 60 cents, which
remained flat year over year but increased from 56 cents in the
previous quarter. The earnings in the reported quarter missed the
Zacks Consensus Estimate of 70 cents per share. Net income came in
at $37.1 million, up 1.4% year over year and 7.8% sequentially.
Revenues
Net sales came in at $256.5
million, up 12.8% year over year (15% on a constant currency
basis), but down 4.4% sequentially. This, however, missed the Zacks
Consensus Estimate of $271 million. The annual rise in the sales
was mostly driven by the company’s improved operations in its
Powder Finishing business.
On a segmental basis, the
Industrial segment sales ameliorated 24% from the year-earlier
quarter to $154.7 million. Revenues from the Contractor segment
sales were $74.9 million, down 4% from the year-ago quarter. The
Lubrication segment sales climbed up 7% from the year-ago quarter
to $26.9 million.
Geographically, sales were up 11%
year over year in the Americas on the back of the Industrial and
Lubrication segments’ sales which were increased by double-digit
during the quarter. Sales increased 4% in Asia Pacific carrying the
onuses of the company’s weak business condition. The European
market sales escalated about 28% (38% at consistent translation
rates), driven by the improved Lubrication and Contractor segments
sales.
Margins
Gross margin came in at 55% in the
reported quarter, declining from 56% in the year-ago quarter but up
from 52% in the previous quarter. The annual decline occurred owing
to non-recurring purchase, increased material costs, negative
currency translation and Powder Finishing operations’ reduced
margin rates, offsetting the price increase during the quarter.
Operating margin came down to 22%
from 25% in the previous year quarter but up from 19.6% in the
prior quarter. The Powder Finishing operations resulted in a surge
in operating expenses of nearly $8 million during the quarter.
The effective tax rate for the
reported quarter was 32%, which remains flat year over year.
Cash Flows
Year-to-date net cash provided by
operating activities was $132 million versus $109 million in the
previous year period.
Outlook
Management anticipates that its
businesses in China, India and Western Europe will face a downturn
owing to the prevailing uncertain economic condition. However, its
business in the Americas would experience a positive growth trend
in the upcoming quarter of 2012. Steady housing recovery in U.S. is
likely to drive Graco’s Contractor equipment business going
forward. Furthermore, according to the company, it will strengthen
its foothold through its diversified businesses and latest product
ranges.
Our
Recommendation
Graco currently has a Zacks #2
Rank, which implies a short-term (1-3 months) ‘Buy’ rating on the
stock.
GRACO INC (GGG): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Graco (NYSE:GGG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Graco (NYSE:GGG)
Historical Stock Chart
From Jul 2023 to Jul 2024