Thursday, January 30, 2020

Graco Pulls A Strong Quarter Out Of A Tough Macro

Graco (GGG) is a pretty special company for a lot of reasons, not the least of which is its ability to outgrow sometimes challenging industrial markets through price realizations and innovative product development. While nothing so far in this reporting season suggests underlying conditions were easier than expected (the opposite, if anything), Graco managed a stronger-than-expected quarter by once again executing to its strengths.

While they're very different businesses, stocks like Graco, Illinois Tool Works (ITW), and IDEX (IEX) put me in a bind when it comes to valuation. Graco is hands down an excellent company and clearly deserves a premium, but with the shares already above 18x forward EBITDA, it's difficult to construct a positive bull case other than "just think of the leverage when the economy turns back up".

Read the full article:
Graco Pulls A Strong Quarter Out Of A Tough Macro

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