Graco (GGG) is back in focus after reporting second quarter 2026 results that showed higher sales, net income and earnings per share versus a year earlier, alongside fresh details on its ongoing share repurchase activity.

At a share price of $79.50, Graco has seen a 7-day share price return of 7.97% and a 30-day share price return of 4.03%. However, the year to date share price return is down 3.80% and the 1-year total shareholder return is down 4.56%, so recent momentum has picked up after a softer spell. The 3-year and 5-year total shareholder returns of 4.20% and 8.88% indicate a more measured longer term record.

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Bulls point to rising earnings, steady buybacks and the recent share price rebound, while bears highlight the softer 1-year return and question how much of this is already in Graco's valuation. Do current multiples still look reasonable?

Most Popular Narrative: 11.7% Undervalued

Graco's most followed narrative points to a fair value of $90 per share versus the recent $79.50 close, which frames the current move as a valuation catch up story.

The analysts have a consensus price target of $90.0 for Graco based on their expectations of its future earnings growth, profit margins and other risk factors.

However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $100.0, and the most bearish reporting a price target of just $84.0.

Analysts are not just nudging fair value higher on hope. Their narrative leans on revenue expansion, firmer margins and a richer earnings multiple a few years out. Curious which assumptions on growth and profitability underpin that $90 figure, and how stretched the implied P/E looks versus the sector?

Result: Fair Value of $90 (UNDERVALUED)

However, weaker visibility on a return to growth, along with tariff or trade policy pressure on Graco's costs, could quickly challenge this 11.7% undervalued narrative.

Next Steps

If the mix of optimism and caution around Graco has you thinking, it makes sense to move quickly, stress test the numbers yourself, and see how the 4 key rewards aligns with your own view.

Looking for more investment ideas beyond Graco?

If Graco's latest results have sharpened your focus, do not stop here. Broaden your watchlist with fresh ideas that could fit different roles in your portfolio.

• Target potential mispricing by scanning companies that score well on quality and valuation through the 50 high quality undervalued stocks.
• Strengthen your income stream by reviewing businesses with robust payouts using the 9 dividend fortresses.
• Prioritise resilience by assessing companies with sturdier finances via the solid balance sheet and fundamentals stocks screener (49 results).

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.