Gorman-Rupp (GRC): Assessing Valuation After Fresh Analyst Upgrades and Growing Bullish Sentiment

Gorman-Rupp (GRC) just picked up fresh buy ratings, including an upgrade from hold, signaling growing confidence in the pump maker’s outlook and putting the stock’s recent climb back on investors’ radar.

See our latest analysis for Gorman-Rupp.

The latest bullish calls come as Gorman-Rupp’s share price has quietly climbed to $46.25, with a solid year-to-date share price return of roughly 24 percent and a standout three year total shareholder return near 85 percent. This suggests momentum is building rather than fading.

If Gorman-Rupp’s renewed momentum has your attention, this could be a good moment to broaden your search and discover fast growing stocks with high insider ownership.

With analysts turning more bullish and the stock still trading at a meaningful discount to consensus targets, the key question now is whether Gorman-Rupp remains undervalued or if the market is already pricing in its future growth.

Price-to-Earnings of 24.2x: Is it justified?

Gorman-Rupp is trading on a price-to-earnings ratio of 24.2 times, a level that leaves the stock looking only modestly valued against peers rather than obviously cheap.

The price-to-earnings multiple compares today’s share price with the company’s earnings per share. It gives a direct snapshot of how much investors are willing to pay for each dollar of profit in a capital goods business like pumps and fluid handling.

Relative to the wider US Machinery industry, where the average P/E sits at 25.5 times, Gorman-Rupp’s 24.2 times looks slightly conservative. This suggests the market is not assigning a growth premium despite earnings having grown faster than the sector recently. However, when set against an estimated fair P/E of 18.7 times, the current multiple looks stretched, implying the share price could need to cool if valuation multiples drift back toward that fair ratio level.

Compared with a peer group average multiple of 48.5 times, Gorman-Rupp still trades at a steep discount. This underlines how divided the market is on how much to pay for its earnings and highlights how much room there could be if sentiment shifted closer to higher valued machinery names.

Explore the SWS fair ratio for Gorman-Rupp

Result: Price-to-Earnings of 24.2x (ABOUT RIGHT)

However, risks remain, including a rotation out of industrials if macro data softens, or execution missteps that slow earnings and undermine recent multiple expansion.

Find out about the key risks to this Gorman-Rupp narrative.

Another View: DCF Points to Slight Overvaluation

Our DCF model suggests Gorman-Rupp’s fair value sits around $45.12, just below the current $46.25 share price. That modest premium hints investors may already be paying up for future growth, which raises the question: how much upside is really left from here?

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 Gorman-Rupp 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 907 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 Gorman-Rupp Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in just minutes: Do it your way.

A great starting point for your Gorman-Rupp research is our analysis highlighting 4 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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