Graco Board Issues New Options; Director Cashed Out at $80
Graco's board declared a $0.295-per-share dividend payable November 4 and issued a new 10-year director option grant on September 14 — while the stock sits at $76.59, below the $80.01 where a company
Graco Board Issues New Options; Director Cashed Out at $80
NEW YORK, September 21 —
Six weeks after Graco Inc. (GGG) posted its largest earnings beat in four quarters, a company director sold 3,218 shares at $80.01. The stock has since slipped to $76.59. The board's subsequent dividend declaration and a new 10-year option grant raise the question: was August's exit routine profit-taking, or a sign the post-earnings rally had a short shelf life?
- Director Etchart's August 3 exercise-and-sell generated $257,487; no insider purchases were recorded in the 90-day window.
- Trailing-twelve-month free cash flow of $537 million on $2.27 billion in revenue; gross margin 52.6%.
- Stock trades at $76.59, 16% below the $91.29 analyst consensus target; forward P/E 21.9x.
A Textbook Exercise-and-Sell at an Inconvenient Price
Graco makes fluid and powder management systems: paint sprayers and two-component foam equipment for the Contractor segment, industrial pumps and lubrication systems, and semiconductor manufacturing pumps alongside oil-and-gas valves in Expansion Markets. Director Eric Etchart's August 3 transaction was a same-day exercise-and-sell: he exercised 3,218 options at a $36.09 strike for $116,127, then sold the resulting shares at $80.01 for $257,487, capturing the spread. Such transactions are common and often pre-scheduled. The uncomfortable detail is timing: the sale came just after the company's 12.4% EPS beat, the largest in four quarters, and no insider purchased a single share in the 90-day window.
The Cash Machine Behind the Discount
The niche applications in Graco's semiconductor and oil-field pump lines support premium pricing. Gross margin sits at 52.6% on $2.27 billion in trailing-twelve-month revenue, growing 3.3% year over year. Free cash flow of $537 million against only $51 million in debt and roughly $510 million in cash produces a near-net-cash balance sheet that a DCF model would reward heavily. Bank of America's disclosed $57.95 million position and 94% institutional ownership suggest the 16% gap to the $91.29 consensus target shows multiple compression, not fundamental deterioration.
| Ticker | Mkt cap | Fwd P/E | 52-wk |
|---|---|---|---|
| GGG | $12.4B | 21.9x | -9.7% |
| IEX | $16.4B | 23.1x | +39.3% |
| NDSN | $17.5B | 24.2x | +38.3% |
| LECO | $14.1B | 20.6x | +7.8% |
| FELE | $4.2B | 18.4x | +0.0% |
What the Next EPS Print Decides
Graco's four-quarter earnings record follows an unusually strict alternating sequence: miss, beat, miss, beat, with each swing larger than the last. If the pattern holds, next quarter is a miss. That would retroactively cast the Etchart sale as something more purposeful than routine option monetization, and test whether the board's September dividend and new 10-year grant signal conviction or simply reset the incentive clock at lower prices after the rally faded. The tell is the next EPS print versus consensus: a beat breaks the pattern and strengthens the bull case; a miss confirms both. Run the free Graco Inc. deep-dive →
Basis Report is independent research for informational purposes. It is not investment advice and not a recommendation to buy or sell any security.
Graco's board declared a $0.295-per-share dividend payable November 4 and issued a new 10-year director option grant on September 14 — while the stock sits at $76.59, below the $80.01 where a company director sold 3,218 shares just six weeks earlier.
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