As of June 7, 2025, Graco Inc's estimated intrinsic value ranges from $31.95 to $85.67 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $85.67 | +0.7% |
| Discounted Cash Flow (5Y) | $80.71 | -5.1% |
| Dividend Discount Model (Multi-Stage) | $64.97 | -23.6% |
| Dividend Discount Model (Stable) | $60.39 | -29.0% |
| Earnings Power Value | $31.95 | -62.4% |
Is Graco Inc (GGG) undervalued or overvalued?
With the current market price at $85.03, the stock appears to be moderately overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Graco Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.87 | 0.91 |
| Cost of equity | 7.9% | 10.0% |
| Cost of debt | 4.5% | 6.7% |
| Tax rate | 15.5% | 17.1% |
| Debt/Equity ratio | 0 | 0 |
| After-tax WACC | 7.9% | 10.0% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $81 | $12,980M | 79.7% |
| 10-Year Growth | $86 | $13,809M | 63.2% |
| 5-Year EBITDA | $85 | $13,690M | 80.8% |
| 10-Year EBITDA | $89 | $14,368M | 64.6% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $425M |
| Discount Rate (WACC) | 10.0% - 7.9% |
| Enterprise Value | $4,258M - $5,403M |
| Net Debt | $(509)M |
| Equity Value | $4,766M - $5,912M |
| Outstanding Shares | 167M |
| Fair Value | $29 - $35 |
| Selected Fair Value | $31.95 |
| Metric | Value |
|---|---|
| Market Capitalization | $14211M |
| Enterprise Value | $13703M |
| Trailing P/E | 29.12 |
| Forward P/E | 25.13 |
| Trailing EV/EBITDA | 15.45 |
| Current Dividend Yield | 123.72% |
| Dividend Growth Rate (5Y) | 10.13% |
| Debt-to-Equity Ratio | 0.00 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $25.70 |
| Discounted Cash Flow (5Y) | 25% | $20.18 |
| Dividend Discount Model (Multi-Stage) | 20% | $12.99 |
| Dividend Discount Model (Stable) | 15% | $9.06 |
| Earnings Power Value | 10% | $3.19 |
| Weighted Average | 100% | $71.12 |
Based on our comprehensive valuation analysis, Graco Inc's weighted average intrinsic value is $71.12, which is approximately 16.4% below the current market price of $85.03.
Key investment considerations:
Given these factors, we believe Graco Inc is currently moderately overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.