Franklin Electric (NasdaqGS:FELE) - Share price, News & Analysis

Q: What is the Fair Price of FELE when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

FELE ($96.12) is trading below our estimate of [[fair value]] ($171.25)

FELE fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	1/6
Past Performance	5/6
Financial Health	5/6
Dividends	3/6

FELE Stock Overview

Franklin Electric Co., Inc., together with its subsidiaries, designs, manufactures, and distributes water and fuel pumping systems worldwide.

Rewards

Trading at 43.9% below our estimate of its fair value

Earnings are forecast to grow 6.29% per year

Earnings grew by 33.3% over the past year

Risk Analysis

Significant insider selling over the past 3 months

Franklin Electric Competitors

Watts Water Technologies

NYSE:WTS

US$5.1b

Timken

NYSE:TKR

US$5.0b

Evoqua Water Technologies

NYSE:AQUA

US$4.9b

Mueller Industries

NYSE:MLI

US$3.9b

Price History & Performance

Summary of all time highs, changes and price drops for Franklin Electric
Historical stock prices
Current Share Price	US$96.12
52 Week High	US$96.95
52 Week Low	US$68.27
Beta	1.06
1 Month Change	30.40%
3 Month Change	36.96%
1 Year Change	15.88%
3 Year Change	109.00%
5 Year Change	149.34%
Change since IPO	8,946.59%

Shareholder Returns

	FELE	US Machinery	US Market
7D	4.9%	4.9%	3.2%
1Y	15.9%	-10.4%	-10.2%

Return vs Industry: FELE exceeded the US Machinery industry which returned -10.4% over the past year.

Return vs Market: FELE exceeded the US Market which returned -10.2% over the past year.

Price Volatility

Is FELE's price volatile compared to industry and market?
FELE volatility
FELE Average Weekly Movement	3.9%
Machinery Industry Average Movement	5.8%
Market Average Movement	7.7%
10% most volatile stocks in US Market	16.9%
10% least volatile stocks in US Market	3.2%

Stable Share Price: FELE is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: FELE's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1944	6,400	Gregg Sengstack	https://www.franklin-electric.com

Franklin Electric Co., Inc., together with its subsidiaries, designs, manufactures, and distributes water and fuel pumping systems worldwide. It operates through three segments: Water Systems, Fueling Systems, and Distribution. The Water Systems segment offers submersible motors, pumps, drives, electronic controls, water treatment systems, monitoring devices, and related parts and equipment.

Franklin Electric Fundamentals Summary

How do Franklin Electric's earnings and revenue compare to its market cap?
FELE fundamental statistics
Market Cap	US$4.45b
Earnings (TTM)	US$175.07m
Revenue (TTM)	US$1.89b

25.4x

P/E Ratio

2.3x

P/S Ratio

Is FELE overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
FELE income statement (TTM)
Revenue	US$1.89b
Cost of Revenue	US$1.25b
Gross Profit	US$642.93m
Other Expenses	US$467.86m
Earnings	US$175.07m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	3.78
Gross Margin	33.94%
Net Profit Margin	9.24%
Debt/Equity Ratio	31.6%

How did FELE perform over the long term?

See historical performance and comparison

Dividends

0.8%

Current Dividend Yield

20%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is FELE undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for FELE?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for FELE. This is calculated by dividing FELE's market cap by their current preferred multiple.
What is FELE's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$4.45b

FELE key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.5x
Enterprise Value/EBITDA	18x
PEG Ratio	4x

Price to Earnings Ratio vs Peers

How does FELE's PE Ratio compare to its peers?

FELE PE Ratio vs Peers

The above table shows the PE ratio for FELE vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	32.1x
WTS Watts Water Technologies	24.3x	0.4%	US$5.1b
TKR Timken	13.4x	8.8%	US$5.0b
AQUA Evoqua Water Technologies	84.9x	25.4%	US$4.9b
MLI Mueller Industries	5.9x	n/a	US$3.9b
FELE Franklin Electric	25.4x	6.3%	US$4.4b

Price-To-Earnings vs Peers: FELE is good value based on its Price-To-Earnings Ratio (25.4x) compared to the peer average (32.1x).

Price to Earnings Ratio vs Industry

How does FELE's PE Ratio compare vs other companies in the US Machinery Industry?

Price-To-Earnings vs Industry: FELE is expensive based on its Price-To-Earnings Ratio (25.4x) compared to the US Machinery industry average (22.4x)

Price to Earnings Ratio vs Fair Ratio

What is FELE's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

FELE PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	25.4x
Fair PE Ratio	17.1x

Price-To-Earnings vs Fair Ratio: FELE is expensive based on its Price-To-Earnings Ratio (25.4x) compared to the estimated Fair Price-To-Earnings Ratio (17.1x).

Share Price vs Fair Value

What is the Fair Price of FELE when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: FELE ($96.12) is trading below our estimate of fair value ($171.25)

Significantly Below Fair Value: FELE is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is lower than the current share price.

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Future Growth

How is Franklin Electric forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

6.3%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: FELE's forecast earnings growth (6.3% per year) is above the savings rate (1.9%).

Earnings vs Market: FELE's earnings (6.3% per year) are forecast to grow slower than the US market (14.5% per year).

High Growth Earnings: FELE's earnings are forecast to grow, but not significantly.

Revenue vs Market: FELE's revenue (4.6% per year) is forecast to grow slower than the US market (7.9% per year).

High Growth Revenue: FELE's revenue (4.6% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if FELE's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Franklin Electric performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

14.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: FELE has high quality earnings.

Growing Profit Margin: FELE's current net profit margins (9.2%) are higher than last year (9.1%).

Past Earnings Growth Analysis

Earnings Trend: FELE's earnings have grown by 14% per year over the past 5 years.

Accelerating Growth: FELE's earnings growth over the past year (33.3%) exceeds its 5-year average (14% per year).

Earnings vs Industry: FELE earnings growth over the past year (33.3%) exceeded the Machinery industry 9.4%.

Return on Equity

High ROE: FELE's Return on Equity (17.9%) is considered low.

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Financial Health

How is Franklin Electric's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: FELE's short term assets ($913.2M) exceed its short term liabilities ($539.5M).

Long Term Liabilities: FELE's short term assets ($913.2M) exceed its long term liabilities ($223.2M).

Debt to Equity History and Analysis

Debt Level: FELE's net debt to equity ratio (28.3%) is considered satisfactory.

Reducing Debt: FELE's debt to equity ratio has reduced from 40.2% to 31.6% over the past 5 years.

Debt Coverage: FELE's debt is not well covered by operating cash flow (10.1%).

Interest Coverage: FELE's interest payments on its debt are well covered by EBIT (30.2x coverage).

Balance Sheet

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Dividend

What is Franklin Electric current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

0.81%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: FELE's dividend (0.81%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.47%).

High Dividend: FELE's dividend (0.81%) is low compared to the top 25% of dividend payers in the US market (3.95%).

Stability and Growth of Payments

Stable Dividend: FELE's dividends per share have been stable in the past 10 years.

Growing Dividend: FELE's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (19.6%), FELE's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: FELE is paying a dividend but the company has no free cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

5.3yrs

Average management tenure

CEO

Gregg Sengstack (64 yo)

8.25yrs

Tenure

US$6,896,933

Compensation

Mr. Gregg C. Sengstack has been the Chief Executive Officer of Franklin Electric Co., Inc. since May 2, 2014 and has been its Chairman since May 8, 2015. He serves as President at Franklin Electric Co., In...

CEO Compensation Analysis

Compensation vs Market: Gregg's total compensation ($USD6.90M) is about average for companies of similar size in the US market ($USD6.53M).

Compensation vs Earnings: Gregg's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: FELE's management team is seasoned and experienced (5.3 years average tenure).

Board Members

Experienced Board: FELE's board of directors are considered experienced (4.8 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: FELE insiders have only sold shares in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/14 00:00
End of Day Share Price	2022/08/12 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31