What is Graco Probability of Financial Distress (%)?
Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, Graco's Probability of Financial Distress (%) is 0.02%.
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
Competitive Comparison of Graco's Probability of Financial Distress (%)
For the Specialty Industrial Machinery subindustry, Graco's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Graco's Probability of Financial Distress (%) Distribution in the Industrial Products Industry
For the Industrial Products industry and Industrials sector, Graco's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Graco's Probability of Financial Distress (%) falls into.
Graco Probability of Financial Distress (%) Calculation
Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.
The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:
| LPFD | = | -20.12 * NIMTAAVG | + | 1.60 * TLMTA | - | 7.88 * EXRETAVG | + | 1.55 * SIGMA | - | 0.005 * RSIZE | - | 2.27 * CASHMTA | + | 0.070 * MB | - | 0.09 * PRICE | - | 8.87 |
| = | -8.73 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.02% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.
2. TLMTA = Total liabilities to Market Total Assets
3. CASHMTA = Cash to Market Total Assets
For non-financial companies, CASHMTA is measured as:
4. EXRETAVG = Excess Return compared to the S&P 500
EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.
5. SIGMA = Standard Deviation of Daily Returns
For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).
6. RSIZE = Relative Size
| RSIZE | = | log (Market Cap | / | Total Market Cap of S&P 500 companies) |
7. MB = Market to Adjusted Book Equity Ratio
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
Graco (GGG) Business Description
Traded in Other Exchanges
Address
88-11th Avenue Northeast, Minneapolis, MN, USA, 55413
Graco manufactures equipment used for managing fluids, coatings, and adhesives, specializing in difficult-to-handle materials. Graco's business is organized into three segments: industrial, process, and contractor. The Minnesota-based firm serves a wide range of end markets, including industrial, automotive, and construction, and its broad array of products include pumps, valves, meters, sprayers, and equipment used to apply coatings, sealants, and adhesives. The firm generated roughly $2.1 billion in sales and $573 million in operating income in 2022.
Executives
| Mark W Sheahan |
officer: VICE PRESIDENT AND TREASURER |
P.O. BOX 1441, MINNEAPOLIS MN 55440-1441 |
| Angela F Wordell |
officer: Executive VP, Operations |
88 11TH AVENUE NE, MINNEAPOLIS MN 55413 |
| Kathryn L Schoenrock |
officer: Executive Vice President |
88 11TH AVENUE NE, MINNEAPOLIS MN 55413 |
| Caroline M Chambers |
officer: Vice President and Controller |
PO BOX 1441, MINNEAPOLIS MN 55440-1441 |
| Eric Etchart |
director |
ROOM F, 22F CROSS REGION PLAZA, 899 LINGLING ROAD, SHANGHAI F4 200030 |
| Van Sant R William |
director |
PO BOX 1441, MINNEAPOLIS MN 55440-1441 |
| Timothy R White |
officer: President, EMEA |
88 11TH AVENUE NE, MINNEAPOLIS MN 55413 |
| Ronita Banerjee |
officer: EVP, Chief HR Officer |
88 11TH AVENUE NE, MINNEAPOLIS MN 55105 |
| Jeffrey P. Johnson |
officer: Vice President |
88 - 11TH AVENUE N.E., MINNEAPOLIS MN 55413 |
| Heather L Anfang |
director |
88 11TH AVENUE NE, MINNEAPOLIS MN 55413 |
| Dale D Johnson |
officer: VICE PRESIDENT |
P.O. BOX 1441, MINNEAPOLIS MN 5440-1441 |
| Christopher D. Knutson |
officer: EVP, Corporate Controller |
88 11TH AVENUE NE, MINNEAPOLIS MN 55413 |
| Claudio Merengo |
officer: President, Worldwide Gema |
88 11TH AVENUE NE, MINNEAPOLIS MN 55413 |
| J Kevin Gilligan |
director |
P O BOX 1441, MINNEAPOLIS MN 55440-1441 |
| Archie C. Black |
director |
333 SOUTH SEVENTH STREET, SUITE 1000, MINNEAPOLIS MN 55402 |
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