Analyst Note| Krzysztof Smalec, CFA |
Wide-moat-rated Graco’s third-quarter adjusted EPS of $0.57 fell $0.06 short of the FactSet consensus estimate. While Graco’s sales were roughly in line with our expectations, margins were adversely affected by supply chain interruptions and cost inflation, especially in the contractor segment. Management reaffirmed its guidance for full-year 2021 and continues to expect organic revenue growth in the mid- to high-teens on a constant-currency basis. We’ve bumped our fair value estimate for Graco to $73 from $72, as time value of money more than offset our slightly more muted near-term expectations. We see shares as fairly valued at current levels.