Graco falls 15.3% after third-quarter EPS misses expectations

What happened

Graco (GGG) fell 15.3% on October 22, 2026, because quarterly earnings per share missed expectations, with EPS of $0.81, 2.5% below estimates. The stock opened 10.6% below the previous close and traded 3.8 times its 20-day average as investors reacted to the results. The company reported record third-quarter fiscal 2026 sales of $586.4 million and said revenue for the four quarters through September 25, 2026, totaled $2.31 billion.

How big was the move

The day’s decline was 6.4 times a typical daily move for this stock, highlighting a sharp, company-specific reaction to the report. The S&P 500 fell 1.2% on the day and the Industrials sector median fell 0.6%, leaving the stock 14.7 percentage points worse than the sector median. Over the last five sessions the stock fell 15.3%, matching the single-session drop, while the S&P 500 over five sessions fell 1.0%.

The technical picture

The stock was 12.0% below its 20-day moving average and 11.8% below its 50-day moving average, with the 50-day average below the 200-day average, a sign of a weak longer-term trend. Its Relative Strength Index (14 days) read 27, below 30, a level often called oversold, and the stock sat 27.6% below the 52-week high. One-month change fell 11.6% and three-month change fell 12.9%. Volatility was 38% annualized over 60 days, the highest reading of the past five years, suggesting larger price swings than usual.

Fundamentals and valuation

For the four quarters through September 25, 2026, revenue was $2.31 billion, growing 5.4% from a year earlier, and diluted earnings per share were $3.10, up 5.8% from a year earlier. Gross margin was 52.0%, compared with 52.3% a year earlier, while operating margin was 26.8%, up modestly from 26.6% a year earlier. Free-cash-flow margin was 25.4% and return on invested capital was 18.8%. The balance sheet showed net debt of 0.0 times EBITDA, and share count over one year decreased by 3.3%.

Those measures point to steady profitability and strong cash conversion even as revenue growth is moderate. The stock trades at 22.3 times trailing earnings, the lowest reading of the past five years (five-year median: 27.9 times earnings), and 21.0 times expected forward earnings. Free-cash-flow yield was 4.4%, a gauge some investors use as a valuation floor for cash-generative businesses.

Earnings and analyst expectations

Graco reported quarterly EPS of $0.81 against $0.83 expected on October 21, 2026, 2.5% below estimates, according to Zacks Investment Research. The company said record third-quarter sales rose 8% from the prior year, with 4% organic growth and contributions from all three operating segments and reportable regions; incoming organic orders rose 7% and backlog excluding acquisitions increased $51 million, or 18%, from the beginning of the period, Business Wire reported.

Consecutive quarters beating estimates stood at 0 and the average surprise over the last four reports was 0.2% below estimates. The typical two-day reaction after recent reports was the stock fell 0.3%, making the current drop substantially larger than past post-earnings moves. Analysts covering the stock have a consensus price target of $95.00 based on 20 analysts, 37.1% above the closing price, with a consensus rating of Hold and 30% of analysts rating the stock Buy or Strong Buy.

Management held an earnings call on October 22, 2026, with participation from CEO Mark Sheahan and CFO Sanjiv Gupta, among others, according to Seeking Alpha. In addition to the results, the company disclosed a technology partnership in which its subsidiary Electric Torque Machines licensed Transverse Flux Motor technology to ABB for data center cooling applications, Business Wire reported.

What to watch

• January 25, 2027: next earnings report date
• Incoming organic orders rose 7% in the quarter and backlog excluding acquisitions increased $51 million, or 18%, from the beginning of the period
• Consensus price target $95.00, 37.1% above the closing price
• Volatility 38% annualized over 60 days, the highest reading of the past five years
• Share count over one year decreased by 3.3%