Gorman-Rupp has had an impressive run over the past six months as its shares have beaten the S&P 500 by 8.6%. The stock now trades at $75.34, marking a 22.1% gain. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now still a good time to buy GRC? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.
Why Are We Positive on Gorman-Rupp?
Powering fluid dynamics since 1934, Gorman-Rupp (NYSE:GRC) has evolved from its Ohio origins into a global manufacturer and seller of pumps and pump systems.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Gorman-Rupp grew its sales at an exceptional 14.7% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Gorman-Rupp’s EPS grew at 17.1% compounded annual growth rate over the last five years, higher than its 14.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Gorman-Rupp’s margin expanded by 12.1 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Gorman-Rupp’s free cash flow margin for the trailing 12 months was 14.3%.
Final Judgment
These are just a few reasons Gorman-Rupp is a rock-solid business worth owning, and with its shares outperforming the market lately, the stock trades at 25.4× forward P/E (or $75.34 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
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