Gorman Rupp Co (NYSE: GRC)

Sector: Industrials Industry: Specialty Industrial Machinery CIK: 0000042682
Market Cap 1.76 Bn
P/B 5.06
P/E 61.81
P/S 2.72
ROIC (Qtr) 9.27
Div Yield % 1.33
Rev 1y % (Qtr) 2.76
Total Debt (Qtr) 322.30 Mn
Debt/Equity (Qtr) 0.80
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About

Investment thesis

Bull case

  • Healthy cash reserves of 42.94M provide 2.06x coverage of short-term debt 20.81M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 100.49M provides strong 26.22x coverage of stock compensation 3.83M, indicating sustainable incentive practices.
  • Robust free cash flow of 84.18M exceeds capital expenditure of 16.31M by 5.16x, indicating strong organic growth funding capability.
  • Tangible assets of 396.83M provide exceptional 52.70x coverage of deferred revenue 7.53M, showing strong service capability backing.
  • Operating cash flow of 100.49M provides strong 13.34x coverage of deferred revenue 7.53M, indicating service delivery capability.

Bear case

  • Operating cash flow of 100.49M barely covers its investment activities of (16.28M), with a coverage ratio of -6.17, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 100.49M provides thin coverage of dividend payments of (19.44M) with a -5.17 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 84.18M represents just -1.41x of debt issuance (59.62M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 409.75M provide limited buffer against comprehensive income items of (20.47M), which is -20.02x, indicating elevated exposure to market risks.
  • Operating cash flow of 100.49M is outpaced by equity issuance of (1.15M) (-87.23 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the Specialty Industrial Machinery
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GEV GE Vernova Inc. 224.93 Bn 194.57 6.14 0.00 Bn
2 ETN Eaton Corp plc 153.13 Bn 38.99 5.75 11.22 Bn
3 PH Parker-Hannifin Corp 135.87 Bn 165.29 12.09 9.87 Bn
4 EMR Emerson Electric Co 111.68 Bn 47.10 4.65 13.41 Bn
5 ITW Illinois Tool Works Inc 86.68 Bn 28.27 5.40 8.97 Bn
6 CMI Cummins Inc 82.13 Bn 28.89 2.44 7.55 Bn
7 AME Ametek Inc/ 53.79 Bn 36.34 7.27 2.28 Bn
8 ROK Rockwell Automation, Inc 43.80 Bn 44.24 5.11 3.68 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.50 2.28
EV to Cash from Ops. EV/CFO 29.82 37.14
EV to Debt EV to Debt 6.74 34.39
EV to EBIT EV/EBIT 28.44 27.71
EV to EBITDA EV/EBITDA 20.50 25.34
EV to Free Cash Flow [EV/FCF] EV/FCF 44.15 133.36
EV to Market Cap EV to Market Cap 1.24 1.04
EV to Revenue EV/Rev 3.37 39.88
Price to Book Value [P/B] P/B 5.06 6.22
Price to Earnings [P/E] P/E 61.81 143.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.58 2.57
Dividend Payout Ratio % Div Payout % (Qtr) 38.70 15.73
Dividend per Basic Share Div per Share (Qtr) 0.74 0.91
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 23.13 82.53
Interest Coverage Int. cover (Qtr) 3.63 12.34
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -36.48 -45.99
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 8.15 118.48
Dividend Growth (1y) % Div 1y % (Qtr) 2.78 10.01
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 2.82 -283.03
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -0.90 -36.87
EBIT Growth (1y) % EBIT 1y % (Qtr) 5.38 -80.72
EBT Growth (1y) % EBT 1y % (Qtr) 35.12 -120.93
EPS Growth (1y) % EPS 1y % (Qtr) 30.82 -39.22
FCF Growth (1y) % FCF 1y % (Qtr) 11.95 85.55
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -0.04 0.87
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.78 0.62
Cash Payout Ratio Cash Payout (Qtr) 0.17 0.10
Cash Ratio Cash Ratio (Qtr) 0.37 3.01
Current Ratio Curr Ratio (Qtr) 2.08 4.97
Debt to Equity Ratio Debt/Equity (Qtr) 0.80 0.38
Interest Cover Ratio Int Coverage (Qtr) 3.63 12.34
Times Interest Earned Times Interest Earned (Qtr) 3.63 12.34
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 17.30 -7,291.27
EBIT Margin % EBIT Margin % (Qtr) 13.21 -7,413.30
EBT Margin % EBT Margin % (Qtr) 9.57 -9,015.79
Gross Margin % Gross Margin % (Qtr) 30.40 -32.61
Net Profit Margin % Net Margin % (Qtr) 7.40 -7,962.06