Value
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.8 |
| P/S | 7.1 |
| EV/EBITDA | 2.9 |
| Fwd P/E | 6.5 |
| PEG | 4.5 |
| Analyst target | 6.0 |
- ▸Forward P/E: 19.9x
- ▸PEG: 2.01
GGG · Why this verdict
Why Graco (GGG) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Graco's best-in-class operating margins and high-quality financial profile provide a durable fundamental anchor, but a confirmed technical downtrend with the stock below its 200-day moving average, three earnings misses in four quarters, and an unusually elevated put/call ratio call for patience while waiting for technical confirmation that the emerging recovery signals are genuine.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Operating margins of approximately 23% and a near-perfect financial-health score place this business in the best-in-class tier among specialty industrial machinery peers, reflecting a high-quality franchise whose profitability has remained structurally strong through the current period of softness. Quality breakdown | Over the next 12 months, sustained operating margins above 22% and continued peer-leading quality metrics will support a gradual re-rating toward the multiple these characteristics have historically commanded. | ↓Deteriorating |
| CounterThree of the last four quarters came in below consensus estimates, suggesting the business may be running into growth headwinds that even strong margins cannot fully offset; if revenue softness deepens, margin pressure may follow. | ||
Despite trading below its 200-day moving average with the average declining at 1.5% over the past 30 days, rising on-balance volume and an improving MACD indicate that buying pressure is emerging beneath the surface — consistent with a potential bottoming process rather than continued breakdown. Momentum breakdown | If the recovery thesis holds, the stock will recross its 200-day moving average within the next two quarters and the death-cross pattern will resolve, providing a technical confirmation that the fundamental quality case can reassert itself. | ↑Improving |
| CounterA death cross in a confirmed downtrend frequently draws additional selling pressure before a genuine floor forms; improving MACD at an RSI of 44 may mark a head-fake rather than a durable inflection, particularly if the next earnings report disappoints. | ||
A put-to-call ratio of approximately 3.83 — well above levels that indicate balanced sentiment — reflects an unusually high degree of protective hedging activity that signals meaningful near-term uncertainty among participants positioning around the stock. Risk breakdown | If near-term uncertainty resolves favorably, the elevated ratio should normalize toward 1.0 or below as hedges are unwound, removing a source of technical overhang. | ↓Deteriorating |
| CounterElevated put/call ratios in high-quality industrials sometimes mark excessive pessimism that sets up a sentiment reversal; a large outstanding put position can act as a contrarian indicator if the business continues to execute at its historical quality level. | ||
Three of the last four reported quarters came in below consensus estimates with an average shortfall of roughly 4 percentage points, producing a weak catalyst track record that limits the near-term re-rating potential even for a fundamentally high-quality business. Earnings | If this pillar persists, the stock will continue to trade at a discount to intrinsic value until a sustained beat record re-establishes earnings credibility; a return to consistent beats would signal that the execution slippage is behind the company. | ↓Deteriorating |
| CounterMiss margins have been narrow (the largest was roughly 11 percentage points), and the one beat quarter was positive; a modest demand recovery or cost stabilization could shift the quarterly cadence back to beats without requiring a fundamental change in the business model. | ||
Operating margins of approximately 23% and a near-perfect financial-health score place this business in the best-in-class tier among specialty industrial machinery peers, reflecting a high-quality franchise whose profitability has remained structurally strong through the current period of softness.
↓DeterioratingQuality breakdown
- Expectation
- Over the next 12 months, sustained operating margins above 22% and continued peer-leading quality metrics will support a gradual re-rating toward the multiple these characteristics have historically commanded.
CounterThree of the last four quarters came in below consensus estimates, suggesting the business may be running into growth headwinds that even strong margins cannot fully offset; if revenue softness deepens, margin pressure may follow.
Despite trading below its 200-day moving average with the average declining at 1.5% over the past 30 days, rising on-balance volume and an improving MACD indicate that buying pressure is emerging beneath the surface — consistent with a potential bottoming process rather than continued breakdown.
↑ImprovingMomentum breakdown
- Expectation
- If the recovery thesis holds, the stock will recross its 200-day moving average within the next two quarters and the death-cross pattern will resolve, providing a technical confirmation that the fundamental quality case can reassert itself.
CounterA death cross in a confirmed downtrend frequently draws additional selling pressure before a genuine floor forms; improving MACD at an RSI of 44 may mark a head-fake rather than a durable inflection, particularly if the next earnings report disappoints.
A put-to-call ratio of approximately 3.83 — well above levels that indicate balanced sentiment — reflects an unusually high degree of protective hedging activity that signals meaningful near-term uncertainty among participants positioning around the stock.
↓DeterioratingRisk breakdown
- Expectation
- If near-term uncertainty resolves favorably, the elevated ratio should normalize toward 1.0 or below as hedges are unwound, removing a source of technical overhang.
CounterElevated put/call ratios in high-quality industrials sometimes mark excessive pessimism that sets up a sentiment reversal; a large outstanding put position can act as a contrarian indicator if the business continues to execute at its historical quality level.
Three of the last four reported quarters came in below consensus estimates with an average shortfall of roughly 4 percentage points, producing a weak catalyst track record that limits the near-term re-rating potential even for a fundamentally high-quality business.
↓DeterioratingEarnings
- Expectation
- If this pillar persists, the stock will continue to trade at a discount to intrinsic value until a sustained beat record re-establishes earnings credibility; a return to consistent beats would signal that the execution slippage is behind the company.
CounterMiss margins have been narrow (the largest was roughly 11 percentage points), and the one beat quarter was positive; a modest demand recovery or cost stabilization could shift the quarterly cadence back to beats without requiring a fundamental change in the business model.
Per-dimension breakdown
Quality
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.8 |
| ROA | 8.0 |
| Gross margin | 6.4 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 7.4 |
| FCF quality | 6.1 |
| Moat | 8.4 |
| Piotroski F | 8.9 |
- ▸Strong margins: 22%
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
- ▸Strong Piotroski F-Score: 8/9
Growth
2.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.5 |
| EPS growth | 0.3 |
Momentum
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 1.0 |
| Volume | 4.3 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -1.1%/30d — confirmed downtrend
Sentiment
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.7 |
| Price target | 7.8 |
| erm sentiment | 5.3 |
- ▸Light analyst coverage (7.0) — signal dampened
- ▸Analyst upside: 21%
Insider
5.2/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.5 |
- ▸Negligible insider selling — $257,487 (0.002% of mkt cap)
Peer rank
6.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.1 |
| quality rank | 8.4 |
| growth rank | 3.9 |
- ▸Best-in-class margins
- ▸Conservative debt levels
Technical
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.0 |
| support resistance | 8.3 |
| 52w position | 4.5 |
Risk (lower is worse)
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 7.4 |
| volatility | 3.7 |
| put call | 0.0 |
| implied vol | 7.3 |
| max pain risk | 7.0 |
| beta | 7.7 |
| debt equity | 9.7 |
- ▸Elevated put/call: 7.42
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 2.4 |
| dividend safety | 8.5 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend aristocrat: 1.8% yield
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:89d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.8<4.5
- ASYMMETRY:0.8<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
0.77
Upside
+5.4%
Downside
7.0%
Sizing output
AVOID
SetupFalling Knife — Death cross, below all MAs, RSI 31, MACD bearish
EdgeTemporary headwind — High quality (8.0) with weak momentum (3.8)
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 8.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.8<4.5, ASYMMETRY:0.8<1.5@spot, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 0.77 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 8.0, Technical at 6.9, and Sentiment at 6.7; the weakest are Growth at 2.4, Momentum at 3.8, and Catalyst at 4.8. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 0.77 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Best In Class Margins And Quality
Trip ifOperating margin falls below 20% for 2 consecutive quarters, indicating the structural margin advantage is eroding.
- P2Recovery Signals In Confirmed Downtrend
Trip ifRSI falls below 35 for 2 consecutive weeks, confirming a breakdown rather than the recovery thesis.
- P3Elevated Options Protective Hedging
Trip ifPut-to-call ratio falls below 1.5 for 2 consecutive weeks, indicating options-market sentiment has normalized and the near-term uncertainty overhang has cleared.
- P4Earnings Miss Pattern Limits Near Term Catalyst
Trip ifEPS beats consensus by more than 3% for 3 consecutive quarters, confirming the earnings miss pattern has durably reversed.