Graco

    Graco SWOT & PESTLE

    • Report

    • ID: 533048
    • 20 Pages
    • April 2022
    • Region: North America
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    About Graco

    Graco is a fluid-handling system and product manufacturer incorporated in Minneapolis, Minnesota. Russell Gray, a Minneapolis parking lot attendant, and his brother Leil Gray created Gray Company, Inc. in 1926 to manufacture and distribute Russell's air-powered grease gun. Graco Inc. provides fluid management technologies and expertise for both industrial and commercial applications. It creates, manufactures, and sells systems and equipment for moving, measuring, controlling, dispensing, and spraying fluids. The firm maintains an ambitious design and development strategy for new products and systems, which it distributes through a global network of distributors and other channels. The Contractor Equipment Division of Graco now has airless sprayers, line striping units, fine finish equipment, texture sprayers, roof painting rigs, and pressure washers (CED). Painting, anti-corrosion, fluid transfer, glueing, and sanitary applications, as well as automotive, aeronautic, body refinish, wood, building and construction, and marine, are just a few of the markets that Graco serves. The firm released the Reactor 3TM spray foam proportioner system, the newest member of the Reactor® proportioner family, on March 31, 2022.

Graco's USP lies in its being one of the leading suppliers of fluid management products and packages in the world. The mission statement of Graco reads, "to generate sustained profitable growth to benefit its customers, employees, shareholders and communities worldwide".

    Business Sector

    Manufacturing

    Operating Geography

    USA, North America, Global

    Revenue

    $ 1987.6 million - FY ending 31st December 2021 (y-o-y growth 20.45%)

    $ 1650.1 million - FY ending 31st December 2020

    SWOT

    SWOT Matrix for Graco

    Strength

    Weakness
    1. Both production and sales are spread around the globe.
    2. Stock has consistently outperformed the market.
    3. Strengthened market position through multiple acquisitions through the years.
    4. Has a portfolio of 8+ brands spread across multiple industries
    1. Lack of a diversified customer base in the contractor segment.

    Opportunity

    Threat
    1. All customer industries are expected to grow throughout 2022.
    2. Food processing industry has a growing need for fluid handling systems.
    3. More industries look to increase energy efficiency and reduce environmental footprint.
    4. Geographical proximity to customers could boost sales.
    1. Rising inflation will increase cost of raw materials.
    2. Russia-Ukraine crisis affects global supply chain.
    3. Ongoing impact of Covid-19 adversely affects business.

    Detailed SWOT Analysis of Graco

    The detailed SWOT analysis for Graco is presented below:

    Strength

    1. Both production and sales are spread around the globe: Incorporated almost a century ago in 1926, Graco Inc. is today a worldwide leader in fluid handling systems. While it is headquartered in Minnesota, US, it manufactures products in United Kingdom, Switzerland, Italy, China, Belgium and Romania. They also have subsidiaries in Australia, Japan and South Korea and Brazil. The company generates a significant portion of its sales abroad (~ 49%), namely in South America, Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC). They have customers in over 100 countries, facilities in 12 countries and over 30,000 outlets and distributors. This global presence has allowed them to establish and maintain a significant market presence. In addition to this, they also serve a multitude of markets ranging from automobile, oil and energy, electrical equipment to food and beverage and pharmaceuticals.
    2. Stock has consistently outperformed the market: Graco has a Return on Equity of 26%. This is a significant improvement upon the industry ROE of 11%. It pays out approximately 33% of it’s earnings and reinvests the remaining. Even when earnings growth of Graco is compared to the industry, the company has grown more than the industry 8.7%. If five-year cumulative total shareholder return for Graco’s stock is graphed along with market indices S&P 500 and Dow Jones US Industrial Machinery Index, then we see that Graco’s stock has outperformed both the indices in the given period.

    The remaining points in this section are available in the 'Complete Report' on purchase.

    Weakness

    This section is available only in the 'Complete Report' on purchase.

    Opportunity

    This section is available only in the 'Complete Report' on purchase.

    Threat

    This section is available only in the 'Complete Report' on purchase.

    PESTLE

    PESTLE Matrix for Graco

    Political

    Economic
    1. The Russia-Ukraine crisis will affect global supply chain.
    2. US-China tensions affect trade and import of raw materials.
    1. The fluid handling systems market is growing at a CAGR of 4.8%.
    2. Stock market expected to remain volatile given domestic and international conditions.
    3. Inflation and supply chain issues in the US increase prices of raw materials.

    Social

    Technological
    1. Increasing urbanization and growing demand for automobiles to spur demand for paint sprayers
    1. Electric vehicle battery manufacturing is undergoing several developments.

    Legal

    ENVIRONMENTAL
    1. US Treasury new rules on foreign tax credits for US multinationals.
    2. Biden’s bipartisan infrastructure law has directed funding for EV charging.
    1. Companies under pressure to increase efficiency and reduce environmental impact
    2. More companies are using alternative energy for manufacturing their products.

    Detailed PESTLE Analysis of Graco

    The detailed PESTLE analysis for Graco is presented below:

    POLITICAL

    1. The Russia-Ukraine crisis will affect global supply chain: Russia’s invasion of Ukraine is currently the major event disrupting the entire world of business. Several countries including the US and European countries have imposed serious sanctions on Russia while Ukraine suffers intense damage. Russia and Ukraine are important to world trade, especially in oil and gas, wheat and rare earth elements. Volatility in energy prices acutely affects several manufacturing companies while rare earth elements are the basis of the semiconductor industry. Automobile and electric industries may face severe supply crunch which may lead to factory shutdowns. Graco’s major source of revenue are these companies and such, the war may have long lasting adverse effects on business. Political tensions are mentioned as a risk factor in Graco’s annual report.  Supply chain issues will affect gross margin.

    The remaining points in this section are available in the 'Complete Report' on purchase.

    ECONOMIC

    This section is available only in the 'Complete Report' on purchase.

    SOCIAL

    This section is available only in the 'Complete Report' on purchase.

    TECHNOLOGICAL

    This section is available only in the 'Complete Report' on purchase.

    LEGAL

    This section is available only in the 'Complete Report' on purchase.

    ENVIRONMENTAL

    1. More companies are using alternative energy for manufacturing their products: Access to renewable energy is becoming a more important factor in manufacturing plant construction and expansion. It is a requirement now given the increasing norms against non-renewable sources of energy. Additionally, manufacturing companies want to take this step as soon as possible to advantage of the cost effectiveness. Support from the Biden administration is adding to the momentum among various stakeholders such as investors, regulators, customers and employees. Graco has developed products to further a manufacturing company’s alternative energy production process. For example, it provides sealant and adhesive dispensing equipment and solutions that are used in installations and manufacturing of solar panels.

    The remaining points in this section are available in the 'Complete Report' on purchase.

    More Info

    Major Competitors

    • Nordson Corporation
    • Snap-on Incorporated
    • Pentair plc
    • The Middleby Corporation
    • IDEX Corporation

    Major Brands

    • Gema
    • High Pressure Equipment
    • QED Environmental Systems
    • White Knight Fluid Handling
    • Sharpe
    • Smith
    • Airlessco
    • ASM
    • Rentalpro

    Table of Contents

    • Company Overview
      • 1.1 About the Company
      • 1.2 Business Sector
      • 1.3 Operating Geography
      • 1.4 Revenue
    • SWOT Analysis
      • 2.1 SWOT Table/ SWOT Matrix
      • 2.2 SWOT Overview
      • 2.3 Detailed SWOT Analysis
      • 2.4 Strength, Weakness, Opportunity and Threat
    • PESTLE Analysis
      • 3.1 PESTLE Table/ PESTLE Matrix
      • 3.2 PESTLE Overview
      • 3.3 Detailed PESTLE Analysis
      • 3.4 Political, Economic, Social, Technological, Legal and Environmental
    • Appendix
      • 4.1 Major Competitors
      • 4.2 Business Sectors / Diversification
      • 4.3 References used to prepare this reports
    • Conclusion
      • 5.1 Closing thoughts
      • 5.2 Methodology used to prepare this report
      • 5.3 Copyrights and Disclaimer

      References and Copyright

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