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Graco (GGG) Forward Rate of Return (Yacktman) % : 13.48% (As of Mar. 2024)


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What is Graco Forward Rate of Return (Yacktman) %?

Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. Graco's forward rate of return for was 13.48%.

The historical rank and industry rank for Graco's Forward Rate of Return (Yacktman) % or its related term are showing as below:

GGG' s Forward Rate of Return (Yacktman) % Range Over the Past 10 Years
Min: -0.03   Med: 13.31   Max: 24.41
Current: 13.77

During the past 13 years, Graco's highest Forward Rate of Return was 24.41. The lowest was -0.03. And the median was 13.31.

GGG's Forward Rate of Return (Yacktman) % is ranked better than
63.24% of 1948 companies
in the Industrial Products industry
Industry Median: 9.265 vs GGG: 13.77

Unlike the Earnings Yield %, the Forward Rate of Return uses the normalized Free Cash Flow of the past seven years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.


Graco Forward Rate of Return (Yacktman) % Historical Data

The historical data trend for Graco's Forward Rate of Return (Yacktman) % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Graco Forward Rate of Return (Yacktman) % Chart

Graco Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Forward Rate of Return (Yacktman) %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 6.32 11.06 22.20 10.38 13.15

Graco Quarterly Data
Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24
Forward Rate of Return (Yacktman) % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 10.81 11.44 12.84 13.15 13.48

Competitive Comparison of Graco's Forward Rate of Return (Yacktman) %

For the Specialty Industrial Machinery subindustry, Graco's Forward Rate of Return (Yacktman) %, along with its competitors' market caps and Forward Rate of Return (Yacktman) % 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 Forward Rate of Return (Yacktman) % Distribution in the Industrial Products Industry

For the Industrial Products industry and Industrials sector, Graco's Forward Rate of Return (Yacktman) % distribution charts can be found below:

* The bar in red indicates where Graco's Forward Rate of Return (Yacktman) % falls into.



Graco Forward Rate of Return (Yacktman) % Calculation

Forward Rate of Return is a concept that Don Yacktman uses in his investment approach. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. He said in the interview (March 2012, when the S&P 500 was at about 1400):

If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normalize earnings. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. $70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%.

The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation).

Graco's Forward Rate of Return of Mar. 2024 is

Forward Rate of Return=Normalized Free Cash Flow/Price+5-Year EBITDA Growth Rate
=1.83352381/93.46+0.1152
=13.48 %

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Graco  (NYSE:GGG) Forward Rate of Return (Yacktman) % Explanation

Unlike the Earnings Yield, the Forward Rate of Return uses the normalized Free Cash Flow of the past five years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.

For the growth part of the Forward Rate of Return calculation, GuruFocus uses the 5-year average growth rate of EBITDA per share as the growth rate, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over five years. The reason we use five years is to make it comparable to the growth rate.


Be Aware

In the Forward Rate of Return calculation, the growth rate is added directly to today's free cash flow yield. Therefore the calculation is reliable only if the company can grow at the same rate in the future as it did in the past. Investors should pay close attention to this when researching growth stocks. A more accurate measurement for return is Return on Capital.


Graco Forward Rate of Return (Yacktman) % Related Terms

Thank you for viewing the detailed overview of Graco's Forward Rate of Return (Yacktman) % provided by GuruFocus.com. Please click on the following links to see related term pages.


Graco (GGG) Business Description

Industry
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

Graco (GGG) Headlines

From GuruFocus

Graco Inc. Announces Fourth Quarter 2022 Earnings Conference Call

By Business Wire Business Wire 01-11-2023

Graco Increases Quarterly Dividend 11.9 Percent

By Business Wire Business Wire 12-02-2022

Graco Announces Regular Quarterly Dividend

By Business Wire 09-15-2023

Director Eric Etchart Sells 6,000 Shares of Graco Inc

By GuruFocus Research 11-04-2023

Graco Develops Electric Variable Ratio Metering for 2K Material

By Business Wire Business Wire 06-15-2023

Graco Announces Regular Quarterly Dividend

By Business Wire Business Wire 02-17-2023

Graco Names Laura L. Evanson Executive Vice President, Marketing

By Business Wire Business Wire 12-06-2022