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Graco (GGG) Free Cash Flow

: $466 Mil (TTM As of Dec. 2023)
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Graco's total free cash flow for the months ended in Dec. 2023 was $120 Mil. Its total free cash flow for the trailing twelve months (TTM) ended in Dec. 2023 was $466 Mil.

Graco's Free Cash Flow per Share for the months ended in Dec. 2023 was $0.70. Its free cash flow per share for the trailing twelve months (TTM) ended in Dec. 2023 was $2.71.

During the past 12 months, the average Free Cash Flow per Share Growth Rate of Graco was 165.80% per year. During the past 3 years, the average Free Cash Flow per Share Growth Rate was 13.00% per year. During the past 5 years, the average Free Cash Flow per Share Growth Rate was 1.30% per year. During the past 10 years, the average Free Cash Flow per Share Growth Rate was 6.30% per year. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Free Cash Flow Growth Rate using Free Cash Flow per Share data.

During the past 13 years, Graco's highest 3-Year average Free Cash Flow per Share Growth Rate was 72.30% per year. The lowest was -16.90% per year. And the median was 12.30% per year.


Graco Free Cash Flow Historical Data

The historical data trend for Graco's Free Cash Flow 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 Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Free Cash Flow
Get a 7-Day Free Trial Premium Member Only Premium Member Only 290.78 322.70 323.33 176.23 466.24

Graco Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
Free Cash Flow 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 51.87 52.54 137.55 155.65 120.50

Graco Free Cash Flow Calculation

Free Cash Flow is considered one of the most important parameters to measure a company's earnings power by value investors because it is not subject to estimates of Depreciation, Depletion and Amortization (DDA). However, when we look at the Free Cash Flow, we should look from a long term perspective, because any year's Free Cash Flow can be drastically affected by the spending on Property, Plant, & Equipment (PPE) of the business in that year. Over the long term, Free Cash Flow should give pretty good picture on the real earnings power of the company.

Graco's Free Cash Flow for the fiscal year that ended in Dec. 2023 is calculated as

Free Cash Flow (A: Dec. 2023 )=Cash Flow from Operations+Capital Expenditure
=651.017+-184.775
=466

Graco's Free Cash Flow for the quarter that ended in Dec. 2023 is calculated as

Free Cash Flow (Q: Dec. 2023 )=Cash Flow from Operations+Capital Expenditure
=159.647+-39.149
=120

Free Cash Flow for the trailing twelve months (TTM) ended in Dec. 2023 adds up the quarterly data reported by the company within the most recent 12 months, which was $466 Mil.

* 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) Free Cash Flow Explanation

Free Cash Flow is very close to Warren Buffett's definition of Owner's Earnings, except that in Warren Buffett's Owner's Earnings, the spending for Property, Plant, and Equipment is only for maintenance (replacement), while in the Free Cash Flow calculation, the cost of new Property, Plant, and Equipment due to business expansion is also deducted. There, Free Cash Flow is more conservative than Owner's Earnings.

In Don Yacktman's calculation of forward rate of return, he uses Free Cash Flow for the calculation. 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.

This is what Yacktman said in his March 2012 interview - when the S&P 500 was at 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).

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 seven years. The reason we use seven years is because research shows that seven years is the length of the typical business cycle.

Therefore, as of Dec23, Graco's Forward Rate of Return (Yacktman) % is

Forward Rate of Return (Yacktman) % (Dec23)=Normalized Free Cash Flow/Price+5-Year EBITDA Growth Rate
=1.85409524/86.76+0.1101
=13.15 %

* 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.


Be Aware

Free Cash Flow within a report period can be affected by management's decisions of capital spending. Therefore, it is important to look at long term when it comes to Free Cash Flow.


Graco Free Cash Flow Related Terms

Thank you for viewing the detailed overview of Graco's Free Cash Flow provided by GuruFocus.com. Please click on the following links to see related term pages.


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

Graco (GGG) Headlines

From GuruFocus

Graco Increases Quarterly Dividend 8.5 Percent

By Business Wire 12-01-2023

Graco Inc. Announces Second Quarter 2022 Earnings Conference Call

By Business Wire Business Wire 07-12-2022

Graco Launches QUANTM Pump

By Business Wire Business Wire 12-16-2022

Graco Inc's Dividend Analysis

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Graco Names Claudio Merengo an Executive Officer

By Business Wire Business Wire 12-06-2022

Graco Announces Regular Quarterly Dividend

By Business Wire Business Wire 02-17-2023

Graco Inc. Appoints Archie C. Black to the Board of Directors

By Business Wire Business Wire 12-02-2022