- If you are wondering whether Gorman-Rupp shares still offer value at current levels, this article walks through what the numbers actually say rather than relying on headlines or hype.
- The stock last closed at US$64.63, with returns of 22.0% over 30 days, 34.3% year to date, 73.7% over 1 year, 150.5% over 3 years and 121.0% over 5 years. This naturally raises questions about how the current price lines up with underlying worth.
- Recent attention on Gorman-Rupp has centered around its role in capital goods and industrial equipment, with investors watching how its pump and fluid handling products position the business in its markets. This backdrop helps explain why the share price and perceived risk profile have been in focus for many investors looking at longer term trends.
- Even with this track record, Gorman-Rupp currently holds a valuation score of 1 out of 6. Next we will look at how different valuation methods assess the stock and then finish with a way to put those valuations into a broader investing context.
Gorman-Rupp scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Gorman-Rupp Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company could be worth today by taking its expected future cash flows and discounting them back to a single present value figure.
For Gorman-Rupp, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month Free Cash Flow is about $88.3 million. Analysts provide detailed estimates out to 2027, with Free Cash Flow of $79.8 million in that year, and then Simply Wall St extrapolates further. By 2035, the model projects Free Cash Flow of $117.0 million, with each future year discounted back to today using the DCF framework.
Combining these discounted cash flows gives an estimated intrinsic value of about US$59.97 per share, compared with the recent share price of US$64.63. On this measure, the stock screens as roughly 7.8% overvalued, which is a relatively small gap and within a reasonable margin of error for any model based on long term forecasts.
Result: ABOUT RIGHT
Gorman-Rupp is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.
Approach 2: Gorman-Rupp Price vs Earnings
For a profitable company like Gorman-Rupp, the P/E ratio is a useful way to relate what you pay for each share to the earnings that business is currently generating. Investors usually look for a P/E that lines up with their expectations for future growth and the level of risk they are taking on, so higher expected growth or lower perceived risk can justify a higher P/E, and the reverse can also be true.
Gorman-Rupp currently trades on a P/E of 32.08x. That sits above the Machinery industry average of 29.60x and below the peer group average of 40.30x, so on simple comparisons it is neither the lowest nor the highest valued name in its space. Simply Wall St also calculates a proprietary “Fair Ratio” of 20.77x for Gorman-Rupp. This metric aims to estimate the P/E you might expect given factors such as earnings growth, profit margin, industry, market cap and specific risks, which can give a more tailored view than a broad industry or peer comparison.
Comparing the current 32.08x P/E with the 20.77x Fair Ratio suggests the shares are priced above that model’s estimate of fair value.
Result: OVERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies.
Upgrade Your Decision Making: Choose your Gorman-Rupp Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simply your story about Gorman-Rupp, including what you think its future revenue, earnings and margins could look like, linked directly to a forecast and a fair value estimate.
On Simply Wall St, Narratives sit inside the Community page and let you plug in your view of the business into a simple model so you can see how your assumptions translate into a fair value that you can then compare with the current share price.
This makes it easier to decide whether Gorman-Rupp looks attractive to you at today’s price. Because Narratives update as new information such as earnings reports or major news is added, your fair value view can stay aligned with what is happening.
For example, one Gorman-Rupp Narrative might assume a higher long term profit margin and place fair value well above US$64.63, while another more cautious Narrative might use lower margins and arrive at a fair value comfortably below the current price.
Do you think there's more to the story for Gorman-Rupp? Head over to our Community to see what others are saying!
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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