GGG earnings analysis
What we found in GGG's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Graco delivered a strong Q2 earnings result, with diluted EPS of $0.87 up 14% year over year and $0.06 above consensus, driven by 130-basis-point gross-margin expansion, tariff refunds, and lower foreign-exchange losses. Revenue rose 3% to $590.552 million but was below the $607.636 million consensus estimate; underlying demand was weaker, as acquisition and currency contributions offset a 1% organic decline. Management maintained its 2026 growth outlook and issued Q3 sales expectations of $580 million to $600 million excluding Valco Melton, whose $447 million cash-funded acquisition is expected to close in Q3.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue grew 3% YoY but missed consensus
- Q2 net sales rose 3% year over year to $590.552 million, accelerating from $540 million in Q1 2026 (+9.4% sequentially) and modestly exceeding the $607.636 million consensus estimate only if comparing estimate; reported revenue was actually $17.084 million below that consensus estimate. Growth reflected 3 percentage points from acquisitions and 1 point from currency, partly offset by a 1-point organic decline.
- EPS rose 14% YoY and beat by $0.06
- Reported diluted EPS increased 14% year over year to $0.87 from $0.76 and rose from $0.70 in Q1 2026. EPS exceeded the $0.81 consensus estimate by $0.06; adjusted diluted EPS was $0.91 versus $0.78 a year earlier.
- Margins expanded sharply
- Gross margin expanded 130 basis points year over year to 53.7%, while operating margin expanded 210 basis points to 29.6%. Operating earnings grew 11% to $175.093 million, aided by $9 million of IEEPA tariff refunds net of surcharges and price realization.
- Contractor margin expanded 4 points
- Contractor was the strongest profit contributor: revenue increased 4% to $299.421 million and operating margin increased to 30% from 26%. The segment benefited from $7 million of acquired sales, broad Americas growth, and a $5 million net tariff-refund benefit.
- Cash generation remains strong
- First-half operating cash flow was $297.965 million, down $10.138 million from $308.103 million a year earlier, while capital expenditures were $28.516 million. Capex represented 2.5% of first-half revenue of $1.131 billion.
- Substantial liquidity supports capital plans
- Liquidity was $1.279 billion at June 26, comprising $507.575 million of cash and $771 million of available committed credit. Management expects liquidity to cover needs over the next 12 months and beyond, including approximately $100 million of 2026 capex.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Organic Industrial demand declined
- Organic demand remained soft: consolidated Q2 volume and price declined 1%, including a 3% organic decline in Industrial, where project timing in finishing systems weighed on sales. Industrial's $249.237 million of revenue growth was entirely supported by $11 million of acquired sales and currency effects.
- Receivables growth pressured cash conversion
- Accounts receivable increased $30.467 million to $424.220 million from $393.753 million at year-end, contributing to first-half operating cash flow declining $10.138 million year over year to $297.965 million.
- Valco acquisition will use significant cash
- The planned Valco Melton acquisition is expected to require $447 million of cash and close during Q3 2026, versus June 26 cash of $507.575 million. The transaction is excluded from the company's Q3 sales outlook of $580 million to $600 million and could materially reduce cash liquidity upon closing.
- Tariff-refund benefit may not recur
- No material risk-factor changes were reported versus the 2025 Form 10-K. However, Q2 earnings included $9 million of tariff refunds net of surcharges, and management stated that legislative, regulatory and judicial developments could affect the availability or timing of additional refunds.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.87
- Gross margin
- 53.7%
- Operating margin
- 29.6%
- Segment
- Contractor: $299.421 million revenue, up 4% year over year; operating earnings $91.161 million.
- Segment
- Industrial: $249.237 million revenue, up 3% year over year; operating earnings $84.346 million.
- Segment
- Expansion Markets: $41.894 million revenue, up 3% year over year; operating earnings $9.488 million.
What they said about what is next.
Management reiterated its 2026 outlook for low-single-digit organic constant-currency sales growth and mid-single-digit growth including acquisitions. It estimated Q3 total sales of $580 million to $600 million, excluding the announced Valco Melton acquisition; no EPS outlook was provided.
The filing reads better than the one before it.
What came before.
- 10-Q · April 22, 2026
- Graco reported Q1 revenue of $540,144,000, a 2% increase from $528,284,000 a year ago, but operating earnings and diluted EPS declined. Gross margin compressed to 52.0% and operating margin fell to 25.5%, driven by…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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