Franklin Electric (FELE): Exploring Valuation After Recent Shift in Share Price Momentum

Franklin Electric (FELE) shares edged slightly higher in the latest session, with the stock now up 4% over the past three months. Investors are keeping an eye on its consistent performance, particularly as the company continues delivering steady annual growth in both revenue and net income.

See our latest analysis for Franklin Electric.

Over the past year, Franklin Electric’s share price has faced some headwinds, but recent months have shown a subtle shift in momentum. While the 1-year total shareholder return sits at -11.8%, the stock has regained some ground with a 3.7% share price return over the past three months. This suggests that investor sentiment may be turning as the company continues to post stable growth figures.

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With shares still trading well below analyst price targets, the question remains: is Franklin Electric undervalued at current levels, or has the market already factored in the company's future prospects and growth trajectory?

Most Popular Narrative: 14.0% Undervalued

The consensus fair value for Franklin Electric is set at $108, notably above the most recent closing price of $92.84. This signals that analysts see significant upside if the company's medium-term growth forecasts play out as expected.

Ongoing modernization and digitalization of water infrastructure, such as adoption of smart monitoring technology (e.g., EVO ONE), together with increased presence in global growth markets, provide recurring and higher-margin revenue channels. This boosts earnings durability and expands long-term net margins.

Read the complete narrative.

Curious what powers this bullish outlook? A mix of margin expansion, recurring revenues, and a profit multiple that hints at bold analyst conviction are at play. The detailed numbers and scenario assumptions behind this narrative will surprise you. Find out what drives this 14% upside.

Result: Fair Value of $108 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, investors should note that exposure to volatile commodity prices and challenges integrating acquisitions could still affect Franklin Electric’s earnings outlook and future growth trajectory.

Find out about the key risks to this Franklin Electric narrative.

Another View: A DCF Model Perspective

Looking at Franklin Electric through the lens of our DCF model, the story shifts. While the analyst consensus leans bullish, the SWS DCF model estimates a fair value of just $84 per share, which is below the current price. This raises fresh questions about growth assumptions baked into current valuations.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Franklin Electric for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Franklin Electric Narrative

If you see things differently or want to take your own approach, you can dig into the data and create your own view in just a few minutes, Do it your way

A great starting point for your Franklin Electric research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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