Fluid and coating equipment company Graco (NYSE: GGG) fell short of the market’s revenue expectations in Q1 CY2026 as sales rose 2.2% year on year to $540.1 million. Its non-GAAP profit of $0.66 per share was 11.1% below analysts’ consensus estimates.
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Graco (GGG) Q1 CY2026 Highlights:
- Revenue: $540.1 million vs analyst estimates of $561.8 million (2.2% year-on-year growth, 3.9% miss)
- Adjusted EPS: $0.66 vs analyst expectations of $0.74 (11.1% miss)
- Adjusted EBITDA: $173.9 million vs analyst estimates of $182.9 million (32.2% margin, 4.9% miss)
- Operating Margin: 25.5%, down from 27.3% in the same quarter last year
- Free Cash Flow Margin: 20%, down from 21.7% in the same quarter last year
- Market Capitalization: $14.47 billion
Company Overview
Founded in 1926, Graco (NYSE: GGG) is an industrial company specializing in the development and manufacturing of fluid-handling systems and products.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, Graco’s 5.4% annualized revenue growth over the last five years was tepid. This fell short of our benchmark for the industrials sector and is a rough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Graco’s recent performance shows its demand has slowed as its annualized revenue growth of 2.1% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
Graco also breaks out the revenue for its most important segments, Contractor and Process, which are 48.1% and 44.5% of revenue. Over the last two years, Graco’s Contractor revenue averaged 7.2% year-on-year growth while its Process revenue (pumps, valves, hoses) averaged 65.8% growth. 
This quarter, Graco’s revenue grew by 2.2% year on year to $540.1 million, falling short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 6.3% over the next 12 months. Although this projection indicates its newer products and services will fuel better top-line performance, it is still below the sector average.
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Operating Margin
Graco has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 27.5%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, Graco’s operating margin rose by 1.3 percentage points over the last five years, as its sales growth gave it operating leverage.
This quarter, Graco generated an operating margin profit margin of 25.5%, down 1.8 percentage points year on year. Since Graco’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Graco’s unimpressive 6.2% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
Graco’s flat two-year EPS was bad and lower than its 2.1% two-year revenue growth.
We can take a deeper look into Graco’s earnings to better understand the drivers of its performance. Graco’s operating margin has declined over the last two years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
In Q1, Graco reported adjusted EPS of $0.66, down from $0.70 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Graco’s full-year EPS of $2.91 to grow 11.6%.
Key Takeaways from Graco’s Q1 Results
We struggled to find many positives in these results. Its revenue missed and its adjusted operating income fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 5% to $81.35 immediately after reporting.
Graco’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
