Back to top

Growth & Income

Todd Bunton

The Gorman-Rupp Company

GRC

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Management at The Gorman-Rupp Company (GRC - Snapshot Report) has started to buy into the global economic recovery. After delivering solid second quarter results, the company said it was cautious and called conditions an "unpredictable environment."

However, after delivering a strong third quarter in which it posted its third consecutive positive earnings surprise, management stated it was "cautiously optimistic that improving business conditions will continue".

Analysts share this sentiment and have been revising their estimates higher, sending the stock to a Zacks #1 Rank (Strong Buy).

Beat by 12% in the Third Quarter

Gorman-Rupp reported third quarter earnings per share of 37 cents, beating the Zacks Consensus Estimate of 33 cents by 12%. It was a 19% increase over the same quarter in 2009.

Top-line growth was strong, increasing 15.4% year-over-year. Sales were higher due to a slowly recovering global economy and higher sales in the international fire protection market, the municipal market, and the construction, rental and industrial markets.

Meanwhile, the gross margin improved slightly from 25.1% of sales to 25.2%. Operating income increased a stellar 19.8%. EPS was impacted 3 cents due to overtime compensation as the company tried to keep up with demand during the quarter - not a bad problem to have.

"Cautiously Optimistic"

Management is cautiously optimistic that it can carry its positive momentum into 2011 as the global economy slowly rebounds. The company's backlog of orders increased 22.8% year-over-year to $104.6 million.

Estimates have been rising higher off the strong quarter. The Zacks Consensus Estimate for 2010 is $1.34, representing 22% EPS growth over 2009. The 2011 estimate is currently $1.60, equating to 20% EPS growth. It is a Zacks #1 Rank (Strong Buy) stock.

Dividend

Since 2000, Gorman-Rupp has raised its dividend at a compound annual growth rate of just 2.5%. It has a dividend yield of 1.3%.

Valuation

Shares are trading at 23.8x forward earnings, a premium to the industry average of 19.2x. Its price to book ratio is also above its peers at 2.8 vs. 2.1.

Read the September 2 article here.

Last Week's Growth & Income Zacks Rank Buy Stocks:

International Flavors & Fragrances, Inc. (IFF) has been surging lately due to strong demand both domestically and abroad. The company recently reported its 5th consecutive positive earnings surprise as revenue growth was strong around the globe. Read the full article.

Cracker Barrel Old Country Store, Inc. (CBRL) recently delivered a 10% earnings beat as a modest increase in same-store sales led to a significant increase in income thanks to relatively high operating leverage. It was the company's 9th consecutive positive earnings surprise. Read the full article.

ITC Holdings Corp (ITC) is one of those rare utility companies with a 5-year projected EPS growth rate in the double-digits. It also has a dividend yield of 2.2%. Read the full article.

Guess?, Inc. (GES) is increasingly becoming a globally recognized brand. Ten years ago, only 6% of revenue came from outside of North America - now it's almost 50%. Read the full article.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RAMBUS INC RMBS 12.45 +5.60%
DIXIE GROUP DXYN 15.49 +5.52%
BOFL HOLDING BOFI 85.51 +5.23%
NETFLIX INC NFLX 345.84 +4.35%
E COMMERCE C DANG 12.53 +3.73%