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Zacks Investment Research upgraded Gorman-Rupp Co. (GRC - Free Report) to a Zacks Rank #1 (Strong Buy) on Feb 11, 2014.

Why the Upgrade?

Gorman-Rupp reported impressive fourth-quarter 2013 financial results on Feb 7, 2014. Adjusted earnings per share in the quarter were 29 cents, up 38.1% year over year. The top-line result also surpassed the Zacks Consensus Estimate of 26 cents by 11.5%.

Sales were $91.6 million in the fourth quarter, up 3.3% year over year. The increase can be attributed to 6.2% increase in domestic sales, partially offset by 1.6% fall in international sales. Domestic water supply projects increased sales in water end markets. Order backlog at the end of the quarter was $182.2 million, reflecting an increase of 27.1% from the year-ago quarter.

Gross margin in the quarter was 23.4%, up 210 basis points year over year. Selling, general and administrative expenses recorded a slight decline of 1.4%. Operating profit increased 51.4% while margin was 8.9% versus 6.0% in the year-ago quarter.

Strong fourth-quarter 2013 results as well as a positive average earnings surprise of 9.7% make us optimistic of first-quarter 2014 results. We have an Earnings ESP of +7.4% for the first-quarter 2014 and +6.0% for 2014.

Also, in the last 30 days, the Zacks Consensus Estimate for Gorman-Rupp has increased by 0.8% to $1.33 for 2014 and by 2.6% to $1.60 for 2015.

Other Stocks to Consider

Gorman-Rupp Co. is a $788 million diversified machinery company. Other stocks worth considering in the industry include Middleby Corp. (MIDD - Free Report) , Altra Industrial Motion Corp. (AIMC - Free Report) and Barnes Group Inc. (B - Free Report) , all of which hold a Zacks Rank #2 (Buy).

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