In This Article:
The Gorman-Rupp Company (NYSE:GRC), is not the largest company out there, but it saw a decent share price growth of 18% on the NYSE over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Gorman-Rupp’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for Gorman-Rupp
What Is Gorman-Rupp Worth?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 10% below our intrinsic value, which means if you buy Gorman-Rupp today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $46.72, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Gorman-Rupp has a low beta, which suggests its share price is less volatile than the wider market.
What does the future of Gorman-Rupp look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Gorman-Rupp's earnings over the next few years are expected to increase by 51%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in GRC’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on GRC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.